“Distinguished Guests, Ladies and Gentlemen, Thank you for the opportunity to give this keynote address. This SA Auto Week is taking place at a time when business confidence is on the rise. There has been a marked improvement in investment sentiment in recent months. This is apparent among both local and international investors.
Over the past month, Deputy President Paul Mashatile and I have had opportunity to engage with business leaders in Beijing, New York and London. Our experience confirms a greater interest in South Africa’s prospects.
The auto sector continues to be one of the star performers of our economy. It makes a significant contribution to our GDP. Last year, around a fifth of value addition within local manufacturing came from vehicle and automotive component manufacturing. The South African auto industry accounts for around 15 percent of total exports. It continues to blaze a trail in strategic economic markets in the European Union, Africa and North America.
The automotive industry is a major employer. In 2023, there were approximately 116,000 people employed in vehicle and component manufacturing. Close to 400,000 people work on the retail side in dealerships and repair shops.
The sector continues to actively support transformation. Since it was established in 2021, the Automotive Transformation Fund has supported more than 60 beneficiaries. It has facilitated market access for black-owned firms to the value of R4 billion and supported approximately 2,400 jobs across the industry value chain.
This year marks a hundred years of vehicle manufacturing in South Africa. Since the first Model T Ford rolled off the assembly line in the Ford plant in Port Elizabeth in 1924, South Africa’s automotive manufacturing footprint has expanded considerably. International auto companies are major investors in the South African economy. They have consistently featured prominently at the annual South Africa Investment Conference, which we inaugurated in 2018.
Over the past few years, these companies have invested an average of R8 billion a year. Component suppliers have invested R4 billion on average a year. Industry giants like Ford, VW, BMW, Toyota and others continue to demonstrate confidence in our economy through by expanding and upgrading existing operations.
From humble beginnings a century ago, this industry has shown remarkable resilience. The success of the automotive sector since the advent of democracy is testament to the success of transformative industrial policy. We have pursued an industrial policy underpinned by increased value-addition.
Through our support programmes and master plan, we have strived to ensure that the automotive sector is stronger, globally competitive and transformed. Through the automotive master plan we aim to increasing the industry’s contribution to global production and increase local content to 60 percent. We aim to bring new companies into the value chain and increasing value addition.
Yet, even as we can celebrate the achievements of the last 100 years, the industry still faces considerable headwinds. Like all manufacturing, the auto industry was hit hard by the COVID-19 pandemic. Global tensions and international conflict have disrupted supply chains. The global transition towards decarbonisation presents a fundamental challenge to the industry.
The transition towards cleaner and more sustainable fuels – together with stringent regulations in key markets – puts a number of automotive firms and sub-industries in a vulnerable position. Even as the journey to net zero poses a challenge for the auto industry, there is at the same time immense opportunity.
The local automotive sector needs to position itself to take advantage of the demand for electric vehicles, new energy vehicles and sustainable fuels. The transition to cleaner, more sustainable practices in the automotive industry is a priority for our government. The automotive industry has a critical role to play in achieving South Africa’s climate targets.
We are committed to working hand-in-hand with the private sector to promote the production of New Energy Vehicles and the development of the necessary infrastructure to support them. In the Opening of Parliament Address in July this year, I said that South Africa will look to beneficiate more of our critical minerals instead of them leaving our country in raw form.
It is therefore encouraging that the Department of Trade, Industry and Competition, together with National Treasury and the Department of Mineral and Petroleum Resources are in conversation about implementing the Electric Vehicle White Paper. This work includes the beneficiation of our critical minerals for the production of new energy vehicles and their associated value chains. It also includes the production of batteries for battery electric vehicles and the development of value chains in the green hydrogen fuel cell market.
We are working to finalise comprehensive NEV policy guidelines that do not exclude alternative technologies such as hybrids and plug-in hybrids. Consideration must be given to incentives for manufacturers as well as tax rebates or subsidies for consumers to accelerate the uptake of electric vehicles. This is not just about creating a greener future but also about ensuring South Africa remains competitive in the global market. As many of our major trading partners rapidly shift towards EVs, it is imperative that we remain part of this global supply chain.
This is a major industrialisation opportunity for South Africa and the region, particularly within the context of the African Continental Free Trade Area. This will position South Africa as a forward-thinking, green economy. It will advance our aspirations to be a global automotive hub. As government, we remain firmly committed to the work already underway to improve the operational performance of our energy, freight and logistics sectors – all of which directly impacts the automotive industry.
Transnet continues with its work to revitalise the Port of Durban. It is also proceeding with the upgrade of the Gauteng-Eastern Cape railway line as part of Project Ukuvuselela.
As the Government of National Unity, we have prioritised inclusive economic growth and job creation. We look forward to deepening our collaboration as government, industry and labour to achieve both these objectives. There may be headwinds. But in challenges lie opportunities. It is up to us to harness these opportunities to grow, to expand and to transform.
I wish you well in your deliberations and look forward to the productive outcomes of SA Auto Week. I thank you.”
