Government vows to stimulate growth of auto component sector
'Some of these reforms include incentive structure, shifting duty credits to reward manufacturing, instead of assembly credits.
'Our critical minerals and metals strategy will prioritise benficiating platinum group metals, copper and manganese for high-value new energy vehicle components like fuel cells and batteries,' he said.
Stronger incentives to produce NEV models locally are also set to take effect.
'The Taxation Laws Amendment Act, gazetted on December 24 2024, introduces a 150% capital allowance, for qualifying investments in EV and hydrogen vehicle production. It covers assets such as buildings, plants and equipment brought into use between March 1 2026 and March 2036.'
On the EV manufacturing skills development front, Tau confirmed that new curricula and certification programmes are being developed with the Tshwane University of Technology, the Cape Peninsula University of Technology and Unisa, which will culminate in a pilot project involving 100 students next year.
'We have walked a long journey with the automotive sector on transformation, inclusion drives growth, the SAAM 2035's target of 130 new black-owned manufacturers, is advancing.'
Tau said the government was working to eliminate compliance burdens and reduce red tape which inhibits investments into the sector.
'Our policy response is accelerating our plan to introduce a general laws amendment bill which looks to fast-track high-impact investments and projects within 90 days.'
He said a study through the International Trade Administration Commission (ITAC) would explore the effect of imports into South Africa and the impact on local production.
'We want to grow the sector — so our first option must not be to wield the stick, but rather offer the carrot to companies, to attract more investment into the country, increasing the value-add of our component manufacturers.'
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Isondo Precious Metals' fuel cell plant in the OR Tambo SEZ proves this viability.' ALSO READ: South Africa faces 25% tariff on US car imports, Minister Parks Tau voices concern Is innovation the answer for automotive industry? Turning to innovation, Tau said global competitiveness hinges on embracing disruption. 'We have been on a path of developing a new industrial policy which focuses on decarbonisation, digitisation and diversification and we follow the example of players in the auto sector. 'In the area of digitisation, Eastern Cape pioneers like S4 and Jendamark demonstrate how AI and automation can future-proof operations.' In decarbonisation, Tau said Borbet SA's 20-year solar energy commitment and Malben Engineering's green steel pilot project align with global carbon rules reshaping trade. As NAACAM notes, carbon has become 'part of the cost of doing business – and increasingly, part of the value too'. 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Interestingly, the DTIC has also been engaging with Suzuki Auto, which recently became the country's second best-selling brand, thanks largely to an affordable product portfolio sourced almost entirely from its Maruti Suzuki division in India. 'I should say that we spoke about the Chinese, but in the next two weeks, we'll also be engaging with both Japan and India. You would know that Suzuki has a great presence in the country right now, and we will be visiting. 'So whilst it's a Japanese company, they're exporting from India to the South African market. So we'll be touching (base with) both the parent company and the company that's exporting into the South African market to see how we can cooperate and collaborate, on the basis of seeking to attract them as an investor into our country. 'So we're not holding the stick as a starting point. We start with the carrot and then balance it with the stick," Tau concluded. IOL has approached Suzuki Auto for commentary and will update the story in due course. It's not just Suzuki that imports vehicles from India. Many of the smaller Toyotas, such as the Suzuki-built Starlet, Vitz, Rumion, and Urban Cruiser, are also sourced from there, as are other high-volume products from Korean brands, most notably the Hyundai Grand i10 and Kia Sonet. Tata is also set to re-enter the South African market later this month. While Chinese imports accounted for just 11% of vehicle sales last year, this number is growing rapidly, and with a raft of new brands set to launch in the near future, including Lepas, iCaur, and the reintroduction of Geely, it would appear that our market is in real danger of being saturated. Consider that the country already has 16 Chinese brands, with Chery and GWM/Haval now fixtures in the top 10 sales list. Can our market realistically accommodate so many brands? Brandon Cohen, Chairperson of the National Automobile Dealer's Association (NADA), commented that South Africa is a relatively small market that already has one of the largest offerings of brands and derivatives locally. This benefits the buyer as it provides fierce competition. However, when it comes to the long-term sustainability of such a prolific brand count, Cohen feels the market will achieve a balance in the not-too-distant future. 'With consumers under extreme financial strain and new offerings that cater for high specification at competitive pricing, it is natural that those entities who cannot compete will suffer,' Cohen told IOL. 'I do, however, think that with certain brands remaining highly aspirational and product life cycles bringing new and exciting cars to market on a regular basis, we may see some brands recover while others could certainly fall away.' Ultimately, their feasibility will depend on economic growth. 'Unfortunately, the market is only so big and is completely dependent on the growth of the economy and jobs. At present, we are still not selling the number of vehicles we were doing before COVID, and without growth, the share of sales will need to keep dividing amongst the brands on offer,' Cohen added. 'If we can get the economy to grow meaningfully, I think more brands will see a brighter future.' IOL Motoring
