When the economic cluster ministers are “grilled” by the National Assembly on Wednesday over challenges including job creation and Eskom’s proposed 36.2% tariff increase, I hope they have good news for our automotive sector. After all, it provides employment, both directly and indirectly, for about 10% of the formal workforce, or 1-million jobs. It is also responsible for about 30% of SA’s manufacturing output.
Donald Trump’s second administration in the US will almost certainly impose tariffs on imported cars, one of the main ways SA benefits under the African Growth & Opportunity Act. Volkswagen has already told its restive German unions that jobs will have to be cut and plants closed, citing Chinese competition and high energy prices.
While Mercedes-Benz, BMW and Audi still retain something of their Veblen-like status, lower Chinese luxury car prices are eating traditional German quality for lunch. Locally, it’s impossible to miss the new Chinese marques in urban traffic. Even my wife is insisting that our next car be Chinese, though Beijing Automotive Group’s new factory in Gqeberha is not expected to start production until 2027. WeBuyCars’ recent upbeat statements suggest that second-hand models are preferred to new.
As for electric cars, the 3,000 sold in SA per quarter are all imported. This could have been different had the Industrial Development Corporation supported Optimal Energy’s Joule about 14 years ago. It produced a four-door saloon before Tesla, but I suspect the internal combustion engine car lobby, already heavily government subsidised, didn’t want competition. Ironically, the prototypes, stored at the Nelson Mandela University, were burnt by rioting students.
As the economic cluster ministers must understand, an automotive sector crash would be devastating for the SA economy. Saving it may no longer be possible, but they could make a start on Wednesday by refusing Eskom’s tariff increase.
James Cunningham
Camps Bay
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