Complacency could be the undoing of the SA motor industry, Ford Africa president Neale Hill said on Wednesday.
Those who think multinational motor companies are so embedded in SA that they will not leave, are in for a rude awakening. They will go where costs, profits and policy are most favourable, he said.
Hill was speaking at a conference organised by Naamsa to address industry uncertainty caused by the government’s sluggishness in finalising a policy to encourage the local manufacture and sale of electric vehicles (EVs).
Nearly all SA-made vehicles use petrol and diesel internal combustion engines (ICE). More than 50% of industry production is exported to the UK and EU, which will ban the sale of ICE vehicles in the next few years. The government should have published a white paper policy document in 2021 to hasten the EV transition but has yet to do so. Industry officials say their parent companies need policy clarity to justify future investments.
Hill, who is also Naamsa president, said SA subsidiaries have to compete for investment against group plants in other countries. “It is not a foregone conclusion that we will get further investment.”
The government’s 10-year-old Automotive Production and Development Programme (APDP), which was updated in 2021, offers identical manufacturing incentives to ICE and EV production. However, given the painfully slow local pace of EV sales, the industry says any policy must include buyer incentives to reduce prices. On average, EVs cost 52% more to build than their ICE equivalents — though this gap will shrink as manufacturing volumes increase.
Toyota SA president Andrew Kirby said any policy should include manufacturing and consumer incentives. The government though, has made clear it favours only the former. Whatever the eventual outcome, the industry needs a decision. The delay is understood to be caused by worries about how to pay for incentives.
Trade, industry & competition minister Ebrahim Patel was due to speak at the conference and offer some policy clues but pulled out. His acting director-general, Malebo Mabitje-Thompson, said merely that discussions are continuing.
Lack of EV clarity is not the only headache for foreign investors. Volkswagen SA MD Martina Biene said APDP incentive benefits have been “almost eaten up” by spiralling international transport and logistics costs. The UK is VWSA’s biggest export customer.
She added that multinationals are also worried by the effect of load-shedding on their SA subsidiaries.
Nearly every industry speaker said that though crisis point on EV policy has not been reached yet, SA cannot afford to delay much longer. Hill said: “The clock is ticking faster than anyone realises.”
Nissan global strategy adviser Mike Whitfield noted that while SA continues to dither on EVs, “the rest of the world has moved on”.
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