Defining a future for SA’s automotive industry

Speaking at the recent National Association of Automobile Manufacturers of South Africa (Naamsa) Automotive Conference, Lionel October, the director-general of the Department of Trade and Industry (DTI) commented that the DTI and the motor industry are now close to finalising the South African Automotive Masterplan, which will come into effect in January 2021 and run until 2035.

October, who has been director-general at the DTI since 2011, said that both the department and industry were “99-percent there” in getting agreement on the Automotive Masterplan, which is due to replace the Automotive Production and Development Programme.

He stressed the importance of the automotive industry as a player in the South African economy, where it formed half of annual manufacturing input. He said that increasing industrialisation through more local content and higher production volumes were important components of the Automotive Masterplan.

“Higher production volumes result in economies of scale and improve an industry’s competitiveness, which impacts on its ability to localise components, with 60-percent local content being a target of the Masterplan,” explained October.

“It is, therefore, very important that we hit the point where we are producing more than a million vehicles a year in South Africa, rather than the current level of about 600 000.”

He said another key component of the Masterplan was to speed up transformation of the industry, with special focus on creating viable black-owned companies in the supply chain as well as the promotion of skilled black employees in the ranks of senior management at major manufacturers.

If this proposal is given the green light by government then the industry should be able to achieve a level 4 on the B-BBEE scorecard.

October concluded his address by stressing the importance of the automotive sector taking advantage of continental trade agreements to increase exports into Africa.