Given the poor outlook for growth in sub-Saharan Africa since the sharp decline in oil and commodity prices, “it would be reasonable to conclude” that any government support programme for the South African automotive industry requires a “sustainable export strategy”, says Mercedes-Benz South Africa (MBSA) CEO Arno van der Merwe.

The framework for the support programme to replace the Automotive Production and Development Programme (APDP) in 2021 should be announced by the end of this year.

Van der Merwe says there are “three things to keep in mind” when discussing a new support programme, namely a small domestic market, volume production and exports.

“The South African passenger car market is somewhere below 400 000 units a year,” explains Van der Merwe.

“Secondly, generally speaking, a car plant starts being competitive  at about 150 000 units a year – that is a good plant. You can be competitive with lower numbers, but, globally, if you talk about car production, that is a good number to start with.

“The third thing is that sub-Saharan African growth is something that is going to take time. We have all seen what has happened with the regional economy since the oil crisis.

“So, if you have a local market that is relatively small – from a global perspective, and you need to generate production numbers in order to gain efficiencies to be competitive, and you have a sub- Saharan African market that will take time to develop, then it is reasonable to conclude that a sustainable export strategy is key to the automotive industry’s success in South Africa.”

Van der Merwe adds that “the promise of Africa is there, but it will take time to develop. Until that time we need to develop South Africa’s automotive industry. We need to maintain and shore up our industry and the only way to do that, is to have an export programme. The idea of automotive manufacturing in job-shop style is not going to work in the long term”.

South Africa makes up around 0.6% of global vehicle production.

The automotive manufacturing industry contributed 10% of South Africa’s total manufacturing output in 2014.

New-vehicle exports from South Africa amounted to R70-billion in 2014, with component exports at R45.7-billion.

In 2015, around 45% of new vehicles sold in South Africa were produced locally.

South Africa has seven car and bakkie plants. Five have export contracts beyond Africa, with smaller volume plants Nissan and General Motors producing mainly for South Africa and the sub-Saharan market.