President Cyril Ramaphosa says the government is committed to supporting the SA motor industry, which remains a beacon of hope in an otherwise moribund economy.
The motor industry contributed 5.3% to GDP and, at R270.8bn, accounted for almost 15% of the country’s exports in 2023, Ramaphosa said at the Auto Week conference in Cape Town, hosted by Naamsa, on Thursday.
More than two-thirds of vehicles produced locally by seven manufacturers were exported to 148 countries around the world.
“It is also a major employer, providing jobs for nearly 500,000 people across the supply chain, and is an industry that needs to be taken seriously,” he said.
The sector also played an important role in transformation, he added, with the Automotive Industry Transformation Fund — funded by vehicle manufacturers — having paid R596m to 67 black- and women-owned automotive companies since its inception in 2021. The fund fosters increased black participation in the SA automotive sector and has provided support to businesses such as panel beaters, car dealerships and component suppliers.
Ramaphosa said the motor industry faced considerable headwinds after being disrupted by the Covid-19 pandemic and supply chain constraints. Stringent antipollution regulations in key export markets placed further strain on SA’s original equipment manufacturers (OEMs), but also offered tremendous opportunities in a move to new energy vehicles (NEVs).
The government stood behind the motor industry during this transformative era, he added, and was working to update the NEV white paper — first released in December 2023 — which set out the policy goals to support the transition to cleaner cars.
“The white paper will not exclude hybrids and plug-in hybrids, and will have subsidies to accelerate consumer uptake of electric vehicles,” the president said.
Though he did not provide a time frame, OEMs have been seeking support for those vehicles and must be seen as wins for the local motor industry.
The NEV white paper currently only offers incentives for the local production of battery-powered and hydrogen electric vehicles (EVs) in which car manufacturers can claim 150% of investment spending on such vehicles in the first year.
OEMs have asked for the policy to be extended to hybrid cars due to the recent decline in demand for EVs and the growing popularity of hybrids in Europe, the main export destination of SA’s seven motor manufacturers.
Ramaphosa’s announcement also comes as good news for consumers as it means electric cars and hybrids could become more affordable.
The NEV white paper offers incentives for EV production though consumers have been waiting for tax breaks and subsidies, as is the case in many markets around the world, to switch to hybrid and electric cars.
The high cost of EVs locally is in part due to them attracting import taxes of 25% compared with the 18% imposed on imported vehicles with internal combustion engines.
When he presented the NEV white paper in December, former trade & industry minister Ebrahim Patel was against reducing EV import duties in the short term, saying sales of battery-powered cars was undesirable due to load-shedding and limited public charging infrastructure.
Since then, load-shedding has all but ended and the number of charging stations has grown, which may prompt incumbent trade, industry & competition minister Parks Tau to revisit the prospect of reducing NEV duties.
On the sidelines of Auto Week, local OEM bosses on Wednesday met Tau for the first time since his appointment in May.
The SA Automotive Master Plan to 2035 envisages SA’s motor industry increasing local vehicle production to 1.39-million units a year by 2035, accounting for 1% of global output. Last year 633,332 vehicles were produced locally.
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