Steering A Crucial Job Driver

The South African automotive industry supports just under 1m jobs. While the industry is stable thanks to considerable support from government, it is imperative that it stays that way.

- Lloyd Gedye

The South African automotive industry is eight times the size it was in 1994. That’s some healthy growth spread across 22 years. The National Association of Automobile Manufacturers of South Africa (Naamsa) is projecting that the industry’s contribution to GDP will sit at around 7.5% in 2017 and going forward could reach 8.5% by 2020, if the sector meets its goal of 1m units sold annually. In 2015 it contributed R256.7bn or 7.2% of SA’s GDP.

Currently, BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota and Volkswagen all manufacture cars in SA, with Chinese manufacturer BAIC having announced it will begin manufacturing in SA from 2018/19.

This growth has come with considerable support from the department of trade and industry (dti), first with its Motor Industry Development Plan (MIDP) launched in 1995, and then its successor, the Automotive Production and Development Programme (APDP), which was launched in 2013. Capital expenditure by the top seven automotive manufacturers was expected to grow to R7.6bn in 2016, up from R6.6bn in 2015, driven to a large extent by the incentives offered by the APDP.

The APDP expires in 2021, so currently its replacement is under consideration and is expected to be finalised by the end of the year. Naturally, the automotive industry is calling for policy certainty on which to base investment decisions and is highlighting the employment it creates and the revenue it generates.

Too big to fail