THE PHOENIX
UNCERTAIN TIMES
In today’ s Trumpian world, we are living in uncertain times. Depending on your viewpoint, it could be the best of times, or it could be the worst of times. It is a tale of two blocs, or maybe three blocs, or even four blocs – all built around the actions of a blockhead. And when it comes to the automotive world, it may even be an engine block
These thoughts came to mind after reading an article by Justin Swanepoel, of Real Research, which appeared recently in Automotive Refinisher. The article was titled“ UNFAIR PLAYING FIELDS FOR SA CONTINUES IN THE AUTOMOTIVE SECTOR” and spelt out the headwinds that the automotive industry in South Africa has been facing, and the hurricane levels that are coming. As Swanepoel says,“ South African OEMs are all already in trouble, and it isn’ t the new tariffs that has suddenly caused this pain.
It can be broken down into a handful of outdated and unfair government systems that are potentially de-industrialising the local OEM value chain, throwing money down the drain and creating an unequal playing field. Let’ s start with some sobering numbers over the past few years:
• The volume of locally manufactured vehicles has decreased by 6.5 % and dropping
• The volume of Chinese, Indian and Japan( let’ s call them Asian) imported brands have increased by 650 % and rising
• The local components volume to local OEM has decreased to below 40 % of the vehicle costs and dropping
• From a sales market share perspective, Asian imported vehicles are sitting around 59 % and locally produced vehicles at 41 %, and this gap will only widen”.
Swanepoel points out that the OEMs build the factories, create the component supply chain, produce the parts, train the people, transfer tech skills, employ the people, etc. And he adds that they also have to deal with the hassles of Eskom, rail, road, strikes, port and clearance problems in their manufacture and RTM processes. Not the best of times. And don’ t mention the transformation word. He suggests that we get real here, listing further hassles- government systems and red tape are making life very difficult to attract and retain local automotive investment, create more automotive employment and build the automotive industry for the local manufacturers and component suppliers.
The Asian brands have the luxury of no factory, no assembly, no logistics, no supplier restrictions, no BBBEE, no localisation of parts and services, no funds towards transformation, no unrealistic government targets etc. They need a logistics or franchise partner to bolt onto, a couple of admin, sales and service staff, some highlevel training and maybe a warehouse to hold some parts that are not even made locally. He adds pithily,“ and don’ t mention all that rah-rah about Asian brands building manufacturing factories and using local component suppliers. The BAIC factory was meant to employ 1 700 staff, create a local component supply chain and build 60 000 vehicles per year, but have only produced 300 vehicles in six years. In my humble opinion and without prejudice, the word I am looking for is: Unfair!”
Unfair? No, it is ludicrous. It is the best of times for some, and the worst of times for others. www. abrbuzz. co. za 01 JULY 2025