The motor sector fears it could fall foul of competition laws if it attempts to design common components for multiple vehicle brands to encourage new investment in the SA industry, Toyota SA president Andrew Kirby believes.
Vehicle production numbers are not enough to attract wholesale localisation of the parts that go into SA-made cars and pickups. The entire production of the local industry, across seven assembly plants and more than 10 product ranges, is less than that of a single plant in some countries. That is why nearly 60% of the average value of SA-made cars and pickups comes from imported components.
The government’s automotive master plan wants to turn this around so that 60% will come from SA by 2035. Besides attracting investment and creating jobs, this would cushion the SA industry against global components shortages.
To achieve the economies of scale required to attract investment, the industry has tried to identify common parts that can be used by different brands but made by one supplier. Among the thousands of components that go into each vehicle, items such as door handles and seat brackets could, in principle, be “commonised”. These could be used locally and for export to other plants around the world.
However, Kirby said concerns had been raised that motor companies could be accused of collaboration. The industry has fallen foul of competition laws before, and Kirby said it was talking to the Competition Commission to see what co-operation was allowed.
Common design would have to be approved not just by SA motor companies but also by their multinational parents. SA assembly plants are all part of global production chains, so local commonisation would have implications beyond SA.
Then there is the problem of timing, Kirby said. When vehicle manufacturers introduce new vehicle ranges, components undergo radical change. Commonisation would be simple if companies changed models at the same time, but they do not.
“We all have different time frames when new models are introduced and they don’t always overlap,” said Kirby, who was speaking at the Auto Week conference at Kyalami.
Opportunity
The advent of electric vehicles (EVs) could provide an opportunity. Trade, industry & competition minister Ebrahim Patel told the conference that the government hoped to announce early next year its policy on incentivising local EV manufacture. Wholesale technology shifts do not come along very often, so there could be some localisation benefits.
BMW SA CEO Peter van Binsbergen told the conference that the industry should do all it could to become globally competitive and increase exports. But he cautioned: “We have world-class quality, but we also need to deliver on time.”
For many years, SA’s monumentally inefficient ports and railways have proved an obstacle to SA trade. As one automotive CEO put it last week: “Any success we have had in growing exports is despite Transnet, not because of it.”
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