Imported brands selling vehicles in SA should be forced to invest in local manufacture as the price of continuing to do business here, Irvin Jim, general secretary of the National Union of Metalworkers of SA (Numsa), said on Thursday.
He said the government should stop pandering to foreign governments, including those of Brics partners, and act on behalf of the economy and SA workers.
Trade, industry & competition minister Parks Tau revealed recently that 64% of cars and bakkies sold in SA are imported, mainly from India and China.
While many of those from India are brought in by SA vehicle manufacturers, with the government’s blessing, to supplement their limited range of locally made vehicles, Chinese brands are imported independently.
At last count, about 25 Chinese brands were on sale in SA. Their attractive pricing has garnered more than 10% of new-vehicle sales — a share that is forecast to grow quickly to at least 20% if unchecked.
This growth takes sales from local vehicle manufacturers and is causing them and their local components suppliers to cut production.
Thousands of jobs have already been lost and many more are at risk.
Jim told the Auto Week conference in Gqeberha that by ignoring the urgency of the situation the government was failing its citizens.
Having been warned repeatedly of a looming crisis, it had not delivered on promises to act.
“Talk is cheap,” said Jim. Warning of the “cancer of job losses”, he said the motor industry was “under siege” and could no longer afford procrastination and empty promises.
“Bold industrial policy is required,” he said. “We need decisive leadership.” He added: “Our turnaround to address these glaring challenges that are bleeding this sector dry and destroying jobs must be quick.”
Actions against independent importers could include higher import tariffs on built-up vehicles, the loss of import-duty credits, stricter enforcement of local automotive homologation requirements for imports and a requirement that they invest in local manufacture.
“Foreign brands must establish plants in SA and localise their manufacture,” said Jim.
SA-first policy
The government should adopt an unashamedly SA-first attitude to the industry, just as Donald Trump has done for the US.
As for Brics partners India and China: “Everything they do is for their own people.
“We need a government that is strong on behalf of SA. We must not hesitate to promote local manufacturing and drive meaningful localisation.”
Rob Davies, who was minister of trade & industry when the government’s 2021-35 Automotive Production and Development Programme (APDP) was devised, told the conference on Wednesday that he was shocked by the local market dominance of imported vehicles. He described the situation as “astounding”.
Justin Barnes, who helped develop the APDP, blamed the situation on the government’s failure to act promptly as it was apparent that imports were taking over the market.
- 64% of vehicles sold in SA are imported — mainly from India and China.
- Job losses are rising as imports cut into local production.
- Industry is “under siege” and needs urgent action.
- Call for higher import tariffs and stricter regulations.
- Government accused of inaction and failing to protect local industry.
- Experts say the current situation undermines the goals of SA’s vehicle policy.
That was not the intention of the programme.
When the APDP was devised, projections forecast that local manufacturers would build more than 345,000 vehicles for local consumers in 2024. In the event, because of imports, the number was 176,488.
Two-thirds of vehicles made in SA are exported but Barnes said it was unhealthy to rely on foreign customers to keep the local industry going.
This was particularly the case now, when most of those exports go to the UK and EU, which plan to outlaw the sale of new petrol and diesel vehicles in the next decade in their quest to force consumers to buy electric vehicles (EVs).
While some EVs are manufactured in SA, most are powered by petrol and diesel internal combustion engines.
Barnes agreed with Jim that urgent action was required to save the motor industry but, based on experience, doubted that the government was prepared for sudden change.
Jim was more forthright. He accused the government of negligence for not enacting the Public Procurement Act, which requires state entities to prioritise the purchase of SA goods, including vehicles.
Finance minister Enoch Godongwana “is going ooh-ah, ooh-ah” over implementing it, said Jim.
He also challenged Tau, who spoke at the conference immediately after Jim, to lead the way in providing the motor industry with additional support.
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