The South African automotive industry is unlikely to see a future wage settlement at a level lower than the 8% to 10% increases a year agreed to in a range of three-year wage deals signed in the retail, components and assembly sectors in 2013, says Nissan South Africa MD and Nissan Africa (South) president Mike Whitfield.

He says wages in the local automotive industry are “significantly higher” than in other competing developing countries, but that the social imperative in South Africa to “close the wage gap” will probably see future wage increases continue to “run ahead of inflation”.

The auto sector is scheduled to thrash out a new wage deal with labour unions in 2016.

Whitfield also emphasised that wage discussions should be less disruptive, as well as “more predictable and proactive”.

The 2013 strike in the assembly industry continued for four weeks.

Whitfield adds that wage increases, such as those seen in the South African auto-motive industry, should lead to increased productivity, which is not always the case.

He views a stable labour environment as one of the key drivers in achieving the combined goal of industry and government to sell and produce 1.2-million vehicles a year in South Africa by 2020, however remote it may seem in 2015.

The local automotive industry last year produced 566 083 units, and sold 644 523 units in the domestic market.

Another key driver to achieve growth in production and sales is a stable automotive policy. Whitfield says this is in place in South Africa in the form of government’s Automotive Production and Development Programme (APDP).

Currently, the subject of a review, it is expected that the APDP will remain largely unchanged and be extended beyond its current end-date of 2020.

Whitfield says another key driver to increase domestic vehicle production and sales is a trade policy that will expand the local industry’s reach into Africa, allowing it to capitalise on the economic growth seen in many African markets.

Yet another driver is access to finance for the numerous potential car buyers in South Africa.

Preferential procurement for locally pro-duced vehicles is also essential, notes Whitfield.

He adds that it will be wrong to think that global vehicle manufacturers will not pull out of South Africa owing to exorbitant exit costs.

The costs of manufacturers exiting Australia are higher than it will be to exit South Africa.