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The SA motor industry could follow its former Australian rival into oblivion if the government does not get an urgent grip on automotive policy, Naamsa CEO Mikel Mabasa said Monday.

He said policy does not take account of changes in the global motor industry, particularly the move to electric vehicles (EVs). Though the government’s automotive master plan, adopted in 2021, is intended to prepare the local industry for the future, its contents “do not keep pace with the rapid, ongoing revolutions in the global sector”.

If SA did not act immediately, it could suffer the same fate as the Australian motor industry, which died in 2017 after the government there failed to adapt to global industry changes.

Addressing the first day of the Southern African Transport Conference in Tshwane, Mabasa warned: “As an emerging economy, SA cannot afford the collapse of an industry that creates thousands of jobs and significant amounts of foreign exchange for our economy.”

Vehicle and components manufacturers account for 18.7% of SA manufacturing output. It has been estimated that the industry supports over 900,000 jobs across the economy — some in the industry itself but many more in other sectors that supply it with goods and services.

Mabasa said the main danger to the industry is its failure to adapt to the accelerating international shift to EVs. With the exception of Mercedes-Benz SA and Toyota SA, which produce limited numbers of EVs, the SA motor industry is geared to the production of vehicles with petrol- and diesel-driven internal combustion engines (ICE).

Over 60% of SA-made vehicles are exported, but the most important markets, in Europe, plan to ban sales of new ICE vehicles in the next few years.

Most SA motor companies are anxious to build EV versions of future models but say they need the government to produce a clear strategy encouraging them to do so.

In nearly all countries where EV sales have flourished, governments have got the ball rolling by offering consumers cash incentives to switch. The SA department of trade, industry & competition should have published a policy white paper last October detailing plans to incentivise the local sale and manufacture of EVs but failed to do so — apparently because the government can’t decide where incentive cash will come from.

Automotive policy is often cited as an example of what could be done to stimulate other industries. President Cyril Ramaphosa has called for its lessons to be applied elsewhere.

Since the adoption in 2013 of the Automotive Production and Development Programme (which remains part of the 2021 master plan), foreign vehicle and components companies have invested more than R60bn in SA. So far, policy has been based on consistency and continuity.

Now, said Mabasa, radical change is needed to meet the EV revolution. “Worldwide, the automotive sector is going through the most rapid and far-reaching changes in its entire existence. If SA is to remain globally competitive, we urgently need to be able to develop new state policies that enable us to do so.”

He added: “As the ICE era comes to an end and new-energy vehicles become the road transport mode of choice, automakers across the globe are retooling their factories and working with their governments to develop policy and legislation to support this new industry. These vehicle manufacturing markets are moving at aircraft speed to … embrace this imminent change.” SA, by comparison, “is moving at a snail pace”.

If it did not act quickly, the local industry would be left manufacturing “legacy” ICE vehicles required by an ever-diminishing number of markets.

Mabasa said: “I appeal to our country’s decision-makers to act to develop policies that will support a transition for our industry. In order to survive, we have no option but to manufacture new-energy vehicles as soon as possible.

“If we accept that our major markets will cease to exist within 10-15 years and refitting factories and developing new models takes around a decade, then the time to make this crucial change has almost run out.”

Article sourced from: https://www.businesslive.co.za/bd/national/2022-07-04-act-fast-or-motor-industry-will-end-up-on-scrap-heap-naamsa-warns/#disqus_thread