Keynote address by Deputy President Shipokosa Paul Mashatile at the South African Automotive Week (SA Auto Week), Gallagher Convention Centre, Midrand
Programme Director, Ms Joanne Joseph,
Premier of Gauteng Province, Mr Panyaza Lesufi,
Minister of Transport, Me Lydia Sindisiwe Chikunga,
Deputy Minister of Transport, Mr Lisa Nkosinathi Mangcu,
MECs from Gauteng and Eastern Cape,
Naamsa President, Mr Billy Tom, Board of Directors and all your colleagues,
Naamsa CEO, Mikel Mabasa and the Advisory Council,
Partners who have made this event possible,
Officials from all Government Departments and Agencies,
Distinguished Friends,
Members of the Media,
Ladies and Gentlemen,
Good Morning,
First, let me take this opportunity to thank you for inviting me to form part at this years’ SA Auto Week which brings together industry leaders to discuss and find solutions to some of our country’s pressing challenges, and to unpack how we can put brakes on the bottlenecks to expanding local manufacturing while producing more green cars for the future.
In light of this, I believe that "Reimagining the Future Together - Driving an Industry of the Future, Today " is an appropriate theme for this year's event, as it encourages introspection and captures the spirit of our shared aspiration to mould a brighter tomorrow.
As a Government, we value innovation and collaboration because we believe they can move the sector forward and pave the path for a more sustainable and technologically advanced future.
For the past three decades, the automotive industry has been fundamental to South Africa’s economy. South Africa has developed and maintained a world-class automotive manufacturing value chain through ongoing government policy support and constructive collaboration with all industry role-players.
A key feature of the South African automotive industry is the way Government, along with all industry role-players, constructively co-operate to optimise the contribution of the automotive industry to the country’s economy.
One of the attractions of South Africa’s automotive policy regime has been our long-term vision and consistency. Since 1995, when the Motor Industry Development Programme (MIDP), the Automotive Production Development Programme (APDP), and the APDP2 were all introduced, the automotive industry has experienced unprecedented growth in exports and investment capital.
The performance of the South African automotive industry is contingent upon a strategic collaboration between the sector and the Government in order to foster the growth and advancement of the industry, particularly in the realm of manufacturing.
Therefore, the growth of the manufacturing sector must be sustained, as it serves as the foundation of both social and economic development.
As a result of its connections throughout the economy, manufacturing's multiplier effects are higher than in most other sectors.
As Government, we understand the importance of a thriving automotive industry in terms of being a large-scale employer, the largest manufacturing sector in the country’s economy, and a very successful exporter.
The automotive industry is not only the largest manufacturing sector in the South African economy, but it also represents approximately 460,000 highly skilled, direct jobs in its formal sector supply chain and annually invests billions of Rands. In addition, more than 1.4 million South Africans are employed by the informal automotive value chain.
The fact that this is a thriving industry does not mean that we should sit back and let it run itself. We must use this conference as a means to clear its greater terrain beforehand. We must have critical conversations about its future in the global market.
Ladies and gentlemen,
Although the domestic new vehicle market in 2022 was still on its recovery path to the pre-COVID-19 levels, the industry excelled on the export side with several records.
South African vehicle and automotive component exports reached a record R227.3 billion in 2022, representing 12.4 per cent of total exports, with vehicle exports reaching R157 billion and automotive component exports reaching R70.3 billion.
South African total automotive trade under the APDP2, including exports and imports, amounted to R435 billion in 2022, and comprised a significant 16,5 per cent of South Africa’s total trade GDP.
In today's rapidly evolving global economy, it is imperative that we take a moment to deeply contemplate and appreciate the immense potential that lies in the harmonious convergence of effective industrial policy and the influx of foreign direct investment (FDI).
Investment by the seven Original Equipment Manufacturers (OEMs), with technology embodied in the investment and promoting domestic value-addition, amounted to R7,1 billion in 2022, while the component sector received investments of R4,5 billion.
Around the beginning of July, I was in Rosslyn when BMW SA confirmed that they would be investing R4,2 billion to manufacture a plug-in hybrid version of the next generation of their iconic X3 SUV for 2024.
The BMW Team further informed me that the Rosslyn plant will make both petrol and diesel-powered X3s, and it will be the only BMW plant in the world that makes the hybrid. This is a very important step for the country and we must continue creating a favourable environment to attract more investment opportunities such as this.
In September, another major international brand, Stellantis SA announced that it will also invest R3 billion to develop a state-of-the-art new vehicle manufacturing facility in the Eastern Cape Province to be located at Coega.
These announcements are encouraging, and they show a lot of faith in our economy despite the difficulties we have been facing.
Those who have invested in South Africa over the years have our deepest gratitude, and we assure prospective investors that the country is open for business and that as Government, we will do everything in our power to safeguard and improve the value of your assets for the foreseeable future.
As I have mentioned, South Africa’s industrialised economy recovered faster than expected from the COVID-19 pandemic, however we recognise the uneven levels of recovery across sectors. We are determined to provide the needed support across sectors towards a thriving economy.
Ladies and Gentlemen,
To facilitate a fair and equitable transition, it is imperative to localise and broaden the scope of domestic manufacturing value addition in components for new energy vehicles.
In my opinion, it would be unjust for the automotive manufacturing transition to occur without preserving current employment and increasing employment.
The dynamics of the South African automotive sector have also changed owing to the consequent global supply chain disruptions as well as the transition to new energy vehicles (NEVs).
The global automotive industry at present is at an important crossroad. OEMs will need to accelerate the development of a new NEV business, while simultaneously running the legacy of the Internal Combustion Engine vehicle business.
This is because of the imminent demand for eco-friendly vehicles in traditional markets which means that the transition to NEVs is inevitable for the export-oriented domestic automotive industry, and it will need to commence with making significant investments in innovation and NEV technology.
To achieve this business-model duality, OEMs, as well as their component suppliers, will need to make dramatic changes and fundamentally re-shape their business models, configurations, capabilities, and corporate culture.
Therefore as Government and private sector, we must invest more in the skills needed such as technical skills, expertise in Internet of Things (IoT) connectivity, machine performance, data drive automation, insight, and intelligence.
At a practical level, if South Africa is to take advantage of the current shifts in the world economy, structural reforms, especially in the energy sector, as well as in infrastructure, this is likely to improve the economy’s productive capacity and international competitiveness.
As I conclude, I believe the auto industry will change more in the next 10 years than it has in the last 100. This rapid change gives us the opportunity to make cars more capable, more sustainable and more exciting than ever before.
Together, we should consider how to create practical, mutually beneficial, and executable plans that will drive the electro-mobility revolution that is conducive to the expansion of our economy. We must create new jobs that are cutting-edge, and provide exciting employment opportunities for our young people.
We should think about how we use legal instruments such as the recently approved African Continental Free Trade Agreement that gives us access to more than 1.2 billion people across our continent, where we can export raw materials to produce vehicle components, where we can sell and even transfer new technologies, which are invented locally by our own young researchers from our townships.
We need to lead conversations and create a conducive legislative policy framework that will enable South Africa to develop and manufacture cars that don't crash or pollute, but that reduce congestion and keep us connected to the most important people, places, and activities in our lives, thereby stimulating the growth of our economy.
All these ambitions are possible if we can come together and collectively define the programme of our efforts towards socio-economic transformation as a country. Attaining a prosperous South Africa is indeed the responsibility of all of us.
We must continue to strengthen these partnerships and advance towards a nation that is embedded in social compacts for the greater good.
Thank you again for inviting me to share my thoughts with you. I wish you success in your deliberations for the rest of the conference and look forward to seeing some of the outcomes that you will prioritise for execution.
Government remains ready to be your partner for the future.
I thank you.
