Innovation
Foreign direct investment (FDI) remains critical to propel growth and create jobs in the domestic economy. Continuing to reflect the power of combining good industrial policy with FDI, investment by the seven OEMs, with technology embodied in the investment and promoting domestic value-addition, amounted to R7,1 billion in 2022, while the component sector received investments of R4,5 billion.
At present, the global automotive industry is on the cusp of changes not seen since the Model T Ford rolled off the production line in the early 1900s, as new regulations, technologies, and consumer preferences transform its products and business models. The shift from ICE technology to electrification will encourage the development of battery-powered vehicles that contain leading-edge software, connectivity and systems, including infotainment, high-performing computers, advanced driver-assistance system features, and electric powertrains.
With these emerging trends, and with vehicles becoming increasingly sophisticated, a single company may struggle to take end-to-end responsibility for production. Thus, more specialised companies will likely enter the automotive sector and play a larger role in specifying and integrating the components and technologies that it produces. The industry will become increasingly diverse as new technologies, revenue sources, and business models emerge. Each industry segment will have a few leaders, but collaboration, from design through sales, will be more important than ever.
The imminent demand for eco-friendly vehicles in traditional markets means that the transition to NEVs is inevitable for the export-oriented domestic automotive industry, and it will need to commence with making significant investments in innovation and NEV technology.