Trade and Industry Minister Rob Davies. Picture: TREVOR SAMSON
Trade and Industry Minister Rob Davies. Picture: TREVOR SAMSON

Trade & industry minister Rob Davies is due to unveil the next stage of the government’s incentive programme for the car manufacturing industry in Pretoria on Friday.

The SA Automotive Masterplan will run from 2021 to 2035 and is intended to build on successes achieved by the current Automotive Production and Development Programme, which will expire at the end of 2020.

While exports have grown and production-related investment has hit new peaks — nearly R10bn in 2018 alone — the government is unhappy with some features of the industry. Black participation is low and after foreign-owned motor companies refused to hand over equity to local black partners, the emphasis is now on creating a black-led components supply industry.

That will go hand-in-hand with the government’s determination to increase local content in SA-made vehicles. Local content,  including labour and manufacturing costs, accounts for about 38% of the ex-factory price. Davies wants this to increase to at least 60%.

It is not only component production that must increase. The SA motor industry will build just more than 600,000 vehicles in 2018, less than 0.7% of global production. Davies wants that share to rise to at least 1% by 2035. Based on estimates of future global demand, that will require a virtual doubling of current SA production.

Some of that will be absorbed by the domestic market but much of it will have to find foreign customers. Africa is seen as a logical target and the government is working with other sub-Saharan governments to create a regional industry with SA at its heart.

Justin Barnes, leader of the government-industry task team advising Davies on automotive policy, said on Thursday that the team presented its final report in August.

Nico Vermeulen, director of the National Association of Automobile Manufacturers of SA, welcomed the government’s follow-up.

“We welcome the fact that the government has come to a decision. The sooner we have certainty about our future business environment, the better.”