Hopes for a quick fix to problems in the government’s flagship motor industry policy, the Automotive Production Development Programme (APDP), have dimmed as no-one has yet been appointed to lead its review.
The 2021-35 programme was originally scheduled for review one-third of the way through, in 2026, but the industry has been pressing for early action since it became clear that key targets are unachievable under current conditions. Industry expectations were that production and employment were supposed to double and local content to grow 50% by 2035. In fact, all three have shrunk since APDP terms were announced in 2018.
One of many unintended consequences is that fully built imports, mainly from India and China, now account for nearly two-thirds of cars and bakkies sold in SA.
Some industry executives had hoped for a reshaped APDP by the end of 2025. That would have required a lead consultant to be in place at the beginning of this year, alongside a steering committee, technical working groups and stakeholder consultation panels.
Business Day has learnt, however, that despite pleas for urgent action, no appointment has been made. A candidate was nominated but then withdrew for reasons described as “administrative in nature, not reflective of any conflict”.
Mikel Mabasa, CEO of vehicle manufacturers and importers association Naamsa, said on Friday last week that he still hoped a lead consultant could be appointed by the end of this year.
With the review itself expected to last 12-18 months, it could be mid-2027 before policy changes are ready. While 2026 remains a possibility, it is thought unlikely given what an industry official calls “the government’s slow pace on policy matters in general”.
Trade, industry & competition minister Parks Tau was asked on Thursday for an estimated review and policy implementation timetable. He did not respond in time for this article.
According to a vehicle manufacturer CEO, who asked not to be named: “Given the current crisis in the industry, I’m not sure we can wait until 2027. Investors need certainty now.”
Mabasa said: “Preparatory work has already taken place between government and industry, including technical data consolidation, export benchmarking, localisation performance reviews and scenario mapping. These will form the evidence base for the upcoming review.
“Broadly, there is alignment between government and industry on the key focus areas that need to evolve: deeper localisation, component industry competitiveness, new-energy vehicle (NEV) inclusion and more inclusive industrial participation.
“The review will refine these themes into measurable policy interventions,” he said.
It can’t happen soon enough. Thousands of jobs have already been lost in vehicle and component manufacturing, and many more are at risk. Factories are producing less amid a general deindustrialisation of the SA economy.
The situation is worsened by the US’s imposition of 25% tariffs on imported vehicles, which has cost the SA motor industry thousands of vehicle exports
— leading, in turn, to significant loss of business for the local components companies supplying parts.
Renai Moothilal, CEO of the National Association of Automotive Components and Allied Manufacturers (Naacam), said at the weekend: “In light of recent component plant closures and job losses, Naacam urges the soonest commencement of automotive-related policy review processes to deal with conditions constraining the manufacturing outlook and localisation levels.”
Flood of imports
The flood of imported vehicles, which account for 64% of local car and bakkie sales, is a direct but unintended consequence of APDP loopholes, says the industry. So is the ability of vehicle-kit importers to claim manufacturing incentives intended for full-scale manufacturers using local components.
Then there is the uneven manufacturing incentive structure, which, say local vehicle producers, forces them to subsidise the prices of imported competitors by selling them discounted import duty credits.
In principle these credits, based on production and local-content levels, are supposed to help local vehicle manufacturers reduce import duties on own-brand vehicles not made in SA. But as imports of other brands, particularly Chinese, have accelerated, manufacturers have found themselves with billions of rand of unused credits for which the only buyers are imported brands.
To protect the local industry, the government has been asked to increase import duties on built-up vehicles from 25% to 30% and to change the duty-credit structure so companies can use the value of excess credits to reduce their own prices.
On top of all this is the issue of NEVs, which, in SA, are almost exclusively electric vehicles (EVs). The overwhelming majority of vehicles built here are powered by petrol and diesel internal combustion engines (ICE). Almost two-thirds of all SA vehicles are exported, most to countries that will outlaw the sale of new ICE vehicles in the next five to 10 years.
Despite a concerted industry plea for a comprehensive NEV incentive strategy, companies complain that all they have been offered so far is a fragmented set of policy intentions. The government says that in addition to an NEV vehicle and components industry, it wants to encourage the local beneficiation of minerals used in the manufacture of NEV batteries.
So far, proposed NEV incentives have all targeted vehicle manufacturing. The government has said it cannot afford to offer the consumer incentives that have enabled EV sales growth in other countries.
Chinese company BYD, the world’s biggest EV manufacturer, added its voice on Thursday. Global vice-president Stella Li, who is visiting SA, said that as part of a package of consumer incentives, the SA government should scrap import duties on plug-in EVs to make them more affordable. “If you don’t incentivise sales, you kill the EV baby before it has a chance to grow up.”
BYD, she said, plans to spend heavily to grow the EV market in SA by building a national network of high-speed charging stations.
