Motoring News

Electric vehicles: Next threat to SA’s automakers

JOHANNESBURG, South Africa – South Africa’s built-up vehicle export programme is under threat from two major fronts according to Messe Frankfurt SA’s recent Hypermobility virtual conference.

The problem was also mentioned by several speakers at the conference.

Hypermobility was fully supported by the National Association of Automobile Manufacturers of South Africa (Naamsa) and had AutoTrader as its headline sponsor. The event was also supported by the Retail Motor Industry organisation (RMI) and the South African Motor Body Repairers Association (Sambra).

The first speaker to highlight the threat to South Africa’s vehicle exports was Neale Hill, MD of Ford SA and vice-president of Naamsa.

MOST EXPORTS GO TO EUROPE

Hill said the immediate threat was a second wave of the virus as has caused further lockdowns in Europes. He added that 2019’s record vehicle exports (387 125 units to 151 countries) for 64% of SA’s vehicle production of 632 000 units.

About 74% of exports went to European – and that, the conference was told, was a major problem for SA vehicle exporters. Hill warned: ”Not only have these countries been hit by the pandemic, but the UK also faces the tough challenges of Brexit, which will see the UK leave the European Union at the end of December 2020.

”There are also ongoing shifts in global trade patterns and a move towards regionalisation.”

PLUNGING FROM ON HIGH

The latest estimate for the future of SA’s vehicle exports, Hill said, was a drop of almost 40% in 2021 from 2019, with forecasts for a full recovery to 2019 levels that could take as long as five years.

This was said to be a sad picture given that auto exports from SA in 2019 were at a new high – 10.2% above the 2018 figure. The automotive industry was the fifth-largest export sector in the SA economy last year, contributing 6.4% to the nation’s gross domestic product.

There has been no announcement of stimulus packages for the local auto industry; Hill said an international survey had shown only six countries had, so far, provided specific help to their motor industries to alleviate some of the effects of Covid-19.

PERIL OF ELECTRIC VEHICLES

Another threat was the swing towards electric vehicles and coming bans on retailing petol and diesel vehicles in some European countries.

Britain, a major market for right-hand drive vehicles assembled in SA, has brought forward the ban by five years to 2030. The ban on petrol-electric hybrids will come in 2035.

”This kind of decision,” the conference was told, ”could have a big effect on the SA auto industry if it cannot switch to electric vehicles for export.”

Naamsa CEO Mikel Mabasa, speaking to Naamsa plans, said the organisation’s major thrust was to ensure the EV started in SA. ”Without EVs the value of SA’s automotive exports,” he warned, ”will drop from 2019’s R201.7-billion to only R40.3-billion and the contribution to GDP will fall from 6.9% to 4.6%.

”Employment would halve from 110 000 jobs.”

EASE UP ON EV TAXATION

He stressed that a healthy and growing domestic EV market would be needed to keep local EV manufacture viable so proposed that import duty on vehicles with engines larger than 1000cc be increased to a starting point of 18% while import duty on EVs (after the three-year no duty period) be set at 18% instead of the current 25%.

There was also a plea to the government to exclude the cost of EV battery packs from ad valorem duty while the OEMs sought further financial support from programmes such as the Automotive Investment Scheme, Volume Assembly Localisation allowance, and to incentivise production.

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