DAVID FURLONGER: SA’s holier-than-thou attitude to illegal car imports

If there’s one thing you can guarantee when you have dozens of speakers and panellists at a four-day conference, and they are open to questions from hundreds of delegates, it is that discussions will go off in unexpected directions.

So it was at last week’s South African Auto Week conference, where we learnt that: South Africa’s holier-than-thou attitude to illegal car imports in Africa is full of holes and hopelessly misplaced; that the resentment of Western nations, and some South African investors, at China’s industrial colonisation of Africa is, um, hopelessly misplaced; and that war-torn Ethiopia, where 1,423 new cars and trucks were sold last year, has a more advanced electric vehicle (EV) policy than South Africa, with its market of nearly half-a-million.

Unlike some sectors, whose events are carefully choreographed to avoid awkward questions and disclosures, the motor industry thrives on them. Most vehicle and components company executives are surprisingly open with their views. There are lots of “Should I really have said that?” moments.

The same applies to former government ministers. While current trade, industry & competition minister Ebrahim Patel was strictly formal with his keynote speech last week, his predecessors Alec Erwin and Rob Davies — architects of government automotive policy and still involved in the industry in advisory roles — were relaxed and informative in onstage conversations.

It had been rumoured that Patel would use the conference to finally announce the government’s EV incentives policy, which should have been revealed through a white paper in October last year. Instead, he put it off again, until next February, to coincide with finance minister Enoch Godongwana’s budget speech.

The problem all along with EV incentives has been how to pay for them. Patel confirmed that the government originally planned to follow the lead of other countries and directly support buyers through subsidised prices.

But given the cost of EVs currently available in South Africa, that would mean giving money to the already-rich. Instead, Patel said a cost analysis “showed us we had to change the idea we had in mind and move [incentives] from consumer to production”.

That will bring the strategy in line with existing automotive policy, which already rewards production. Though that policy does not distinguish between engine technologies, there is a strong view that EVs need additional stimulation if local companies are to transition from the petrol/diesel internal combustion engine (ICE).

That decision will be made in global head offices in Germany, Japan and the US. BMW South Africa CEO Peter van Binsbergen said last week: “We have to go to parent companies with a compelling argument. To do that, we need a policy.”

Ethiopia, one of Africa’s poorest nations, already has one. It wants to become the African hub for EV manufacture. Several multinational motor companies have expressed interest in investing there but are put off by its lack of political stability, particularly its propensity for civil war.

That hasn’t stopped the country from marketing itself as an EV destination. It has exempted EVs from VAT, surtax and excise duty. Some vehicles are already assembled, where a development plan hopes to put thousands of electric buses and nearly 150,000 electric cars on the roads in the next 10 years.

One of South Africa’s biggest challenges is quite the opposite — to remove cars from its roads. In this case it’s used cars. Kia South Africa MD Gary Scott revealed that there are about 440,000 illegally imported used cars driving around the country, with another 55,000 coming in every year.

Officially, used vehicles may not enter South Africa. The only exceptions are those brought in by foreign diplomats or returning South African citizens, and collectable, classic cars.

Instead, used cars are pouring across our borders, many of them through Durban harbour. In theory, they are on their way to customers in neighbouring countries, where import rules are less strict. In fact, they disappear into the local traffic as soon as they clear Durban port formalities.

Two years ago, when Patel proposed an investigation into illegal imports, it was estimated that there were “over 300,000” such vehicles on the roads, costing the country R3bn annually in lost duties. Scott says that bill could now be as high as R8bn.

The growth is ironic, given that South Africa is prone to lecturing other African countries on their inability to stop the used trade. Plans to develop a pan-African motor industry are heavily dependent on controlling the flood of dumped, used vehicles from wealthy nations — something that Scott says will get worse in a few years when those nations have to get rid of millions of ICE vehicles no longer welcome on their roads in the shift to electric power.

The conference’s first speaker was Wamkele Mene, South Africa-born secretary-general of the African Continental Free Trade Area secretariat — the body charged with turning the continent into the world’s largest free-trade zone. He had some advice for countries, including South Africa, that complain about the willingness of African nations to let China finance so many major infrastructure projects: “If you don’t want them to do it, do it yourself.”

“We complain about Chinese investment, but we don’t do the things they do,” he said. There was plenty of scope for South African private sector investors to be involved. “As the most industrialised country in Africa, we have the opportunity to do more,” he said.​