South Africa is still an attractive proposition for investment by the automobile and allied industries despite the many challenges it faces according to the newly-appointed Managing Director of Stellantis, Mike Whitfield.

Speaking on the opening day of naamsa, the Automotive Business Council’s SA Auto Week in Johannesburg, Whitfield said: “Any auto manufacturer wants a level playing field with a transparent set of rules and South Africa has that.

“Africa has a pressing need for mobility solutions and the population is growing rapidly with Lagos, Nigeria likely to become the world’s biggest city in the near future.”

Stellantis, which has Alfa Romeo, Peugeot, Citroën, Jeep and Opel as primary brands in its stable, recently announced it would be building a major assembly plant in Coega near Gqeberha where it would assemble a light commercial vehicle (bakkie) – and the group revealed it would announce its official strategy and global commercial vehicle lineup on October 23 in Amsterdam.

SA Auto Week, which also forms part of the country’s Transport Month activities, is the local automotive industry’s premium networking and thought leadership conference and the council represents 42 passenger vehicle brands, 22 light commercial and 20 medium and heavy commercial vehicle brands.

“SA Auto Week brings together all the role players in the industry to discuss its accomplishments and future, highlight the latest technologies and debate policies currently under consideration,” says Mikel Mabasa, CEO of naamsa.

Mikel Mabasa

“It also creates a platform to discuss and manage the challenges presented by the global and local economy together, to ensure that the right decisions are made to support South Africa’s growth ambitions.”

The automotive industry is the largest manufacturing industry in the South African economy and last year contributed around 4,9% to the country’s annual GDP. It directly employs 497 408 people formally and informally, which is 2,9% of the 16,2-million people employed in SA.

More importantly, the SA auto industry also exports products to 152 markets and generated R227,3-billion in export revenue for the country last year.

Extaordinary Contribution

“The local automotive industry makes an extraordinary contribution to South Africa’s prosperity, and that is why it is important to secure its viability and growth, now and into the future,” says Mabasa.

Government has been backward in coming forward with a comprehensive policy for New Energy Vehicles and has delayed any announcement on this – however, the industry is hopeful of a positive statement with the interim Budget announcement in November.

“As an industry reliant on exports to marketssuch as Europe, who has shifted away from ICE vehicles, we have to be able to adapt and meet these stringent demands in order to continue delivering vehicles there and to other similar markets,” says Billy Tom, naamsa President and CEO of Isuzu Motors South Africa.

“Locally, our approach to the continued introduction of NEVs will need to take into consideration aspects such as charging infrastructure and offering the correct balance between hybrid, plug-in and Battery Electric Vehicles.”

For the year-to-date August 2023 compared to the same period last year, plug-in-hybrid vehicle sales increased by 37,0%, traditional hybrid increased by 54,9% and electric vehicles increased by 128,5%. The NEV sales of 4 674 units accounted for 1,23% of total new vehicle sales recorded during this period.

Looking ahead, naamsa expects the new vehicle market to remain under pressure and the organisation has a subdued outlook over the medium term.

Lee Naik, CEO of Transunion, pointed out the twonship economy poured R900-million into the economy but a good portion of those spenders were not financially included in the overall economy and faced enormous challenges relating to mobility where the average price of new car based on current sales is R395 000.

“The country has to do more to create and support small and medium business enterprises,” he says.

Vice President of naamsa for the OEM Retailers, Thabo Magasa, concurred and added: “We have to support entrepreneurs who can then access credit and become car buyers but, to do that, we have to look at the whole vehicle supply chain and make it bigger.”

Other Factors

Other macro-economic factors that are expected to impact the SA vehicle market include continued loadshedding, commodity price fluctuations, backlogs at ports, as well as infrastructure deterioration of road and rail networks. Automotive legislation that is expected to affect the industry includes the constitutional ruling on the validity of AARTO, grey import strategies and the Automotive Production Development Policy (APDP2).

Tom said naamsa’s vision continues to aim to be the “most credible organisation that forms part of a globally competitive transformed automated industry that actively contributes to the sustainable development of South Africa.

The observance of Transport Month in South Africa in October again highlights government’s fractured, piecemeal approach to transport issues in the country, says the Automobile Association (AA).

The Association says while Transport Month has been launched with a bang, there appears to be little or no progress in improving road infrastructure, or the daily mobility crisis faced by millions of South Africans.

“Highlighting transport issues in one month of the year while not very much is done in the other eleven months of the year to deal with the problems of mobility and transport is meaningless, and a waste of taxpayer money. This approach is like the seasonal campaigns on road safety: improving road safety won’t happen because two or three weeks of the year are spent speaking of the problem while nothing is done to improve road safety in the other 49 weeks of the year. In our view this is the same in relation to Transport Month and road transport and mobility issues confronting citizens daily,” says the AA.

The Association notes one of the stated objectives of Transport Month is to “… raise awareness of the importance of the sector (transport) on the economy”. In this context, various plans and goals for transport are announced by the national and provincial Departments of Transport at public events in October.

“But the reality is millions of South Africans continue to struggle with inadequate road transport, poor mobility solutions, and with deteriorating road infrastructure, and the already weak economy continues to suffer because of the low – or slow – pace of road transport development. We are not convinced that enough is being done to address this dire situation and observing Transport Month simply papers over the cracks with public events and pronouncements,” says the AA.

Road Crashes

As an example, the AA notes, again, that road crashes cost the economy upwards of R200-billion annually.

“Yet recommendations such as doubling the number of traffic law enforcers on the country’s roads to deal more effectively with road traffic violations go unheeded. In fact, statistics show the country’s road safety record has not improved significantly at all during the past decade despite many Ministers of Transport committing themselves and their department to doing just that. Another example is the vast amount of money directed to the Gautrain which caters for an elite group of commuters,” says the AA.

In its latest annual report, the Gautrain Management Agency (GMA) notes that in the 2022/2023 financial year Bombela – the private concessionaire (operator) of the Gautrain – received a R2,3-billion subsidy known as the Patronage Guarantee from the Gauteng Department of Roads and Infrastructure for lower ridership levels on the system. This money came from the department’s total budget of around R8,5-billion.

This means more than 27% of the budget was spent on servicing a small group of commuters while the majority of commuters in the province still face enormous mobility issues with reduced funding to resolve them.

“In this context, for instance, we believe other more suitable public transport initiatives should benefit from this public funding, which is currently not the case. Against this patently unfair background – and given the enormous transport and mobility challenges in the country – government is failing to acknowledge that citizens want real, meaningful change, and not the observance of a month where much is said but in which little is done to improve their transport, mobility, and road infrastructure needs,” the AA concludes.

Colin Windell - proudly CHANGECARS