Black participation in the motor industry must accelerate if the industry is to meet its long-term transformation goals, Mikel Mabasa, CEO of Naamsa, told a conference in Johannesburg on Monday.
Industry officials were also warned they must urgently address a growing skills gap or risk being left behind by a global automotive shift to new technologies and working practices.
BMW SA CEO Peter van Binsbergen told the Naamsa transformation conference that the country’s seven major vehicle manufacturers had all achieved broad-based BEE Level 4, the minimum transformation standard required to qualify for the full range of government benefits under the Automotive Production and Development Programme (APDP).
However, 60% of components suppliers were at level 5 and only 20% of vehicle dealerships had achieved level 4. “There are lots of opportunities for improvement,” he said.
Vehicle manufacturers owe much of their relative success to contributions into the multibillion-rand Automotive Industry Transformation Fund (AITF), created in 2020 to identify and mentor nascent black local companies, mainly producers of sub-components. These contributions are an equivalent quid quo pro for the refusal of multinational motor companies to cede part-ownership in their SA subsidiaries.
Van Binsbergen said 38 multinational components companies with SA operations were also preparing to pay into the AITF rather than share ownership. He said the immediate aim of industry transformation was to establish 100 new, sustainable black businesses by 2025, of which at least 30% would be owned by women.
Ipeleng Mabusela, the AITF’s head of strategy and investment, said the fund had already paid out more than R1bn to budding black entrepreneurs, creating over 1,000 jobs. However, load-shedding and rising interest rates were discouraging others from taking on loans.
Thabo Shenxane, CEO of the Automotive Industry Development Council (AIDC) in the Eastern Cape, said some potential black suppliers industrialists were also frustrated by the time it takes for finance approvals to be granted by government agencies. “We want to give them quicker answers.”
Automotive policy uncertainty is also a problem. While most of the world is turning to electric vehicles (EV), the SA motor industry remains wedded to petrol and diesel internal combustion engines.
The department of trade, industry & competition should have published an EV policy white paper in 2021 but now say it may not be ready until 2024. Many vehicle and components companies say the lack of clarity makes it hard to plan confidently for the future.
Van Binsbergen said: “[EVs] are a significant change in our industry. Our transformation must align with this new direction.”
That could be a challenge, warned Naamsa transformation and public policy executive Tshetlhe Litheko. The SA transition to EV production, when it finally comes, will render obsolete up to 15 automotive production trades in the next 10 years, leaving potentially thousands of qualified specialists without a job. Yet trainees were still being educated in these skills.
The SA education system, including tertiary education, is already failing to provide students with the necessary engineering skills for current needs. It will need a complete change of heart to meet future requirements.
Shenxane called for a “completely new” engineering curriculum to meet the needs not just of the motor industry, but of SA industry as a whole.
Disa Mpande, CEO of Merseta, the government’s manufacturing and engineering education and training authority, said SA must break the cycle of forever playing catch-up with other countries’ motor industries. “By the time we are ready to teach new technologies, [those countries] will already have moved on to the next ones.”
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