60% local cars, more than a million vehicles a year - SA's 'Automotive Masterplan' for 2021

The Department of Trade and Industry (DTI) and the motor industry are close to finalising the "South African Automotive Masterplan" set to come into effect from January 2021 and run until 2035.

Lionel October, director-general of the DTI, outlined the masterplan at the Naamsa Automotive Conference, part of the Festival of Motoring at the Kyalami Grand Prix Circuit in Gauteng.

October said that the DTI and the industry were "99% there" in agreeing on the plan, which is due to replace the current Automotive Production and Development Programme.

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

October said: "Higher production volumes result in economies of scale and improve an industry’s competitiveness, which impacts on its ability to localise components, with 60% local content being a Masterplan target. 

"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."

Transformation in the industry

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. The aim is to have manufacturers to achieve a level 4  for Broad-based Black Economic Empowerment (BBBEE).

In 2017, the "Big 7" in the SA vehicle manufacturing industry proposed creating a transformation empowerment capital fund of R3.5-billion over a 10-year period as the equity equivalent of having empowerment shareholders in the wholly-owned subsidiaries of multinational companies. 

The fund will be used to facilitate the entry of black companies and industrialists into all aspects of the local automotive value chain including component suppliers and dealerships.

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

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