South African car exports almost halved, partly due to a slowdown in demand in Europe because of stricter emission rules and competition from cheaper electric vehicles (EVs) from China.
Exports fell 42.6% in October to 17,324 from a year earlier, according to the Automotive Business Council, or Naamsa, data.
The European Union, South Africa’s biggest car export market, has been phasing in stricter rules to reduce the amount of carbon dioxide vehicles are allowed to release.
Still, Naamsa is optimistic that shipments could improve. “Easing of monetary policy in key export markets could see the vehicle export momentum turn positive again over the medium term,” it said.
The European Central Bank lowered interest rates for the third time this year in September. Exports may also get a thrust from the EU imposing higher tariffs on EVs from China this week.
Do or die for South Africa
The drop in exports comes after prominent industry stakeholders warned that South Africa should accelerate the implementation of EV-friendly policies or risk losing its edge in the global automotive manufacturing sector.
Automakers including Ford, Toyota, and VW – who all have vehicle assembly operations in South Africa – have sounded the alarm on the country’s EV aversion, stating that not introducing legislation promoting the development and adoption of battery-powered cars on local soil could see the country being overlooked when it comes to future investment decisions.
VW has already approached other African nations such as Egypt for potential tie-ups, and Ford has stated that its facility in Thailand could become the preferred choice for future plans given that it is now more affordable to run than its domestic production hub in Pretoria.
Toyota, meanwhile, has urged government to look at more niche elements of EVs where there remains plenty of potential to become a market leader.
The country’s most popular automaker suggested that instead of trying to be a global powerhouse in the development of each and every part of an EV, South Africa could look at specialising in things like e-axles which could help it protect the local manufacturing industry while also achieving the goals set out in the Automotive Production Development Programme and its complementary document, the South African Automotive Masterplan.
“There is no reason why we can’t say let’s support particular components and vehicles in very targeted ways that will lead to the localisation [of parts],” said Toyota South Africa CEO Andrew Kirby.
Toyota bZ4X electric SUV
The powers that be have shown a willingness towards EVs in recent times, with President Cyril Ramaphosa announcing in October that government is considering introducing incentives to encourage local manufacturing of EVs.
It is also mulling over the idea of providing tax rebates or subsidies to promote EV adoption, which up to this point has been lagging in comparison to major international markets.
“This is not just about creating a greener future, but also about ensuring South Africa remains competitive in the global markets as many of our major trading partners rapidly shift toward EVs,” Ramaphosa said.
“It is also imperative that we remain part of this global supply chain. If we don’t we will be left behind.”
Reporting with Bloomberg.
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