Auto sector continues to enjoy Patel’s patronage

Ebrahim Patel

By John Fraser

Minister Ebrahim Patel has nailed his colours to the mast in supporting the SA auto sector and has promised a deeper partnership.

He made his remarks to a recent conference on the auto industry and innovation, which was held at Kyalami and hosted by the auto manufacturers’ association NAAMSA.

The conference was warned that there is a rapid change in the industry, brought on by leaps in technology, but there remains a lot of uncertainty.

Patel, who heads the recently enlarged Department of Trade, Industry and Competition, spoke of “a shift to a different gear in engagement with industry.”

He said technology will reshape how cars are produced, how cars are powered, how cars are driven, how cars are owned, and how cars are connected.

Government recently endorsed a Masterplan to chart the development of the auto industry, with key aims of doubling production and boosting local content to 60%.

“We require a flexible Masterplan, with agile manufacturers, workers who can continuously reskill,” he said.  “7% of SA’s GDP is contributed by the auto industry.”

Areas where there will be a deeper partnership between government and the auto sector should include growing new markets, especially in Africa, with the new continental free trade area (AfCFTA) being the “biggest game-changer.”

Turning to innovation, Patel spoke of rapid developments in batteries and other advances.

“This is quite a profound shift from the internal combustion engine to vehicle electronics”, he suggested.

He spoke of this transition to electric vehicles as a major opportunity for SA, and he said manufacturers must not wait for a consumer market to grow before moving to electric vehicle production in SA, as the export market is growing fast.

As part of the government’s support for the auto sector, it is planning an auto-suppliers’ Special Economic Zone in Tshwane.

One of the architects of the auto masterplan, Douglas Comrie of B&M Analysts, said this is the most significant manufacturing sector in SA, and the stakes are quite high.

He said there is twice as much investment by the big car makers in electrification and shared vehicles as is going into actual manufacturing.

He said future changes are daunting, and we must evaluate what is within our control.

SA still needs an institution to coordinate, monitor and evaluate support for the auto sector, but we have yet to see significant progress on this.

There is tremendous uncertainty over technology and skills development.

The head of Toyota in SA Andrew Kirby, who is also the President of Naamsa, said the industry’s 6.9% share of GDP is significant.

He stressed the need to support local suppliers, including smaller firms, and to bring in the latest technologies.

“The auto industry developed a five-year business plan to 2023 on volume, investment, local content, transformation, and to deal with technology,” he said.

“Last year we made 610 000 units; current plans are to rise to 800 00 units – a significant increase.”

In the next few years, local content will increase from 39% to 42%, resulting in R12.6bn in additional value produced in SA.

An extra 16 000 jobs will be created, mostly in the component sector.  With a multiplier effect, this rises to 46 000.

There will be new investment by manufacturers of R40bn in the next 5 years, some of which will be used to develop black-owned components firms.

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