The country recently hosted its inaugural Auto Week at the Kyalami Raceway – an event featuring multiple presentations and panel discussions from major industry participants both domestically and abroad.
Hosted by the National Association of Automobile Manufacturers of South Africa (Naamsa), the event brought together many of the country’s biggest automakers to discuss the current state of the industry and how carmakers can facilitate the change to new energy vehicles (NEVs) in the coming years.
Current state of the industry
The local motor industry contributes 4.3% to the gross domestic product (GDP) and accounts for 17.3% of all manufacturing in the country.
Looking at a larger scale, South Africa represents 53.6% of manufacturing for the entire African continent and is the 21st largest vehicle-producing country in the world.
Nearly half a million cars were produced in the country last year, and many of these were exported to more than 150 foreign markets, bringing in R207 billion.
The industry directly employs roughly 30,000 people, with more than 5,000 of these jobs created in the period between July 2021 and June 2022 indicating a good recovery following the Covid-19 period, and 28% of the new jobs are for youth employees.
The industry is also trying to move away from imports to focus on local production with one example – light commercial imports – having decreased from 294,000 in 2017 to 262,000 in 2021.
Plans for the future
The general consensus during the panel discussion was that the country has an opportunity to become a major manufacturer of NEVs and their components, including batteries for electric vehicles as well as green hydrogen.
The country has access to many of the materials needed to create lithium-ion batteries, and it was proposed that the few materials that it lacks can be imported from neighbours such as Namibia and Zambia.
To ensure that South Africa is able to become a global hub for NEV production, the panelists agreed that an eco-system needs to be cultivated for cheaper NEV and component imports, which requires a reduction in the current import duties imposed on EVs that sits at 25%, compared to 18% on petrol and diesel vehicles.
The push for new energy production is an attempt to stay ahead of market trends, as the concern is that the country’s vehicle export market is at risk in the global transition to EVs.
The United Kingdom, for example, is South Africa’s biggest export market, and since many European countries are aiming to eliminate the sale of combustion engines in the next 10 to 15 years, it is possible that South Africa will lose access to key vehicle markets around the world.
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