THE PHOENIX THE PHOEN
EDITOR’ S NOTE
Korean lessons for SA auto industry
Chinese vehicles conquered 15 % of the local market last year. And on the current growth trajectory, that market share could easily be at 20 % by the end of 2026.
Questions about Chinese subsidies and incentives aside, the fact is that Chinese vehicles ' pricing and value proposition are what South Africans want. It ' s the ultimate rebuttal of the legacy brand narrative. Most car buyers aren ' t brand loyal; they want features and affordability. The success of Chinese models over the last few years proves that. But what does the flood of imported Chinese vehicles mean for South Africa ' s industrial automotive policy? Since 1995, South Africa has pursued a structured, interventionist economic policy to protect and develop the local automotive manufacturing industry and its downstream supply base.
The current APDP programme, which became substantive in 2013, has missed all its benchmarks. That’ s not a reflection of the technical skills within the South African automotive ecosystem( which are world-class), but rather on how unresponsive industrial policy has been to global events and the Chinese export model.
Which auto industry model for SA?
Over the last decade, there has been a dearth of visionary ideas or policies for realigning the APDP programme to protect and grow the local automotive industry and its supply chain. The outcome is that South African-built vehicles ' influence in domestic and global markets is waning, while China ' s export policy is winning.
Nearly all successful automotive industries are driven by exports and supported by secondary domestic demand. The one notable exception
is America, where the sheer size and per-unit profitability have created a market in which American domestic automotive factories build mostly for American demand, without the need for exports.
South Africa will never have the domestic automotive spending power to create a production-parity situation like America ' s. Which global automotive economies should local policymakers be benchmarking?
South Korea has a much younger automotive industry than South Africa, but one that has scaled globally with immense success. South Africa was building vehicles for premium brands at a time when Korea could not even assemble its early, substandard budget models in the 1980s. Decades later, Korean car companies are globally respected.
What was the secret of the Korean automotive industry miracle? Selective state intervention, but also a broader mission for improved living standards. One that references the earliest automotive industry success, from Ford. It ' s worth remembering that Henry Ford ' s mission was to build an industrial base and a wage system that enabled employees to become owners of Ford vehicles.
Renowned Korean automotive industry economist Ha-Joon Chang has advice for the South African automotive industry. And Chang’ s guiding principle is that industrial policy should elevate living standards, not just benefit specific groups.
Lance
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