South Africa’s automotive sector is a success story in an embattled manufacturing industry.
Trade and Industry Minister Dr Rob Davies has credited the success of the sector, in part, to the country’s long-term policy certainty and incentives developed under the Industrial Policy Action plan (Ipap), which is now in its eighth iteration.
“We are in a much better position now than what we would have been without the Ipap implementation,” he told media on the sidelines of the Manufacturing Indaba.
“We may not even have [had] an automotive industry [without it],” he added, stating that policy certainty had enabled South Africa’s automotive industry to avoid the same fate as Australia’s where all production was set to cease in 2017.
Further, the success of the Automotive Production and Development Programme (APDP) could provide a template for the Department of Trade and Industry’s (DTI’s) future incentive programmes in other sectors.
Engineering News previously quoted Davies as saying the R7.8-billion in incentives disbursed through the APDP had unlocked R28.5-billion in investments by original-equipment manufacturers and contributed more than R150-billion in exports in 2015.
This comes as German vehicle manufacturer BMW reiterated its long-term commitment to South Africa, borne out by a R6-billion investment at its Rosslyn plant.
“When we look at manufacturing . . . we compete against other BMW plants globally,” said BMW South Africa’s Bongani Mshibe, noting that, when its parent company examined investment strategies, it took into consideration factors such as logistics, the environment, consumer demand and skills in determining where to inject funds.
The plant planned to produce the BMW X3, with the sports utility vehicle market said to be the fastest-growing segment globally, he told delegates during a panel session.
Further, South Africa provided the company with a platform to launch into the rest of sub-Saharan Africa, as well as the opportunity to expand localisation through potential local battery production or even engine assembly, which would offer the country a significant job creation and skills development opportunity.
Meanwhile, the DTI was in the process of drafting a “post-2020 Automotive Master Plan”, a successor programme to the APDP, scheduled to come to an end in 2020.
It was said that the entire automotive sector would be reviewed to include light, medium and heavy vehicles and motorcycles, with the DTI aiming to secure “higher levels of investment and production, higher exports, deeper localisation and [increased] employment”.