South Africa’s vehicle manufacturing industry showing signs of decline, Toyota CEO warns
TOYOTA South Africa Motors (TSAM) CEO Andrew Kirby has warned that the country’s automotive industry could be entering a phase of reduced industrial output.
This is something that the government needs to look at very seriously, Kirby warned last week during a seminar hosted by the National Association of Automotive Component and Allied Manufacturers (Naacam).
The CEO warned that the quantity of imported vehicles was increasing as a percentage, while average local content from the country’s vehicle manufacturers was declining.
While he acknowledged that the industry would go through cycles, he said these could very well be the early signs of de-industrialisation, and that it was something the country would need to take “very seriously”.
Kirby said that the current Automotive Production and Development Programme II (APDP II), which is aimed at incentivising local manufacture, did not do enough to support local market penetration by carmakers.
“We can see what’s coming, let’s address it now and have the foresight and the will-power and the courage to do the changes and modifications to it,” the CEO said.
Furthermore, he said the current ad valorem tax structure on vehicles was nothing short of archaic, as it taxes a budget vehicle and a premium product the same as it would have in 1995.
“It is something that very simply needs to be addressed, updated and fixed, which will go a long way to helping create the scale and growing the market in South Africa,” Kirby said.
He is not the first automotive CEO to sound warnings about the future of our manufacturing industry.
In late 2023, Ford South Africa President Neale Hill said he feared that investments from parent companies abroad could run dry later this decade if the country did not get its house in order.
Around the same time, Volkswagen’s global brand CEO Thomas Schäfer warned that due to disruptions caused by load shedding and port delays, as well as rising labour costs, the company’s local plant in Kariega was not as cost competitive as it once was.
"Eventually you have to say, why are we building cars in a less competitive factory somewhere far away from the real market where the consumption is?" Schäfer asked.
"I'm very worried about it ... We're not in the business of charity."
South Africa currently boasts five high-volume export products, these being the Volkswagen Polo, Mercedes-Benz C-Class, BMW X3, Ford Ranger and Toyota Hilux.
However, vehicle exports have declined by nearly 20% year-to-date, due to various factors including model changeovers.
The only locally-produced products that sell in high volumes on South African soil are Toyota’s Hilux and Corolla Cross as well as VW’s Polo and Polo Vivo, and Isuzu’s D-Max.
South Africa’s automotive industry currently employs over 120,000 people directly, as well as hundreds of thousands more in the supply chain, and it accounts for almost 6% of the country’s GDP.
Sources: MyBroadband, Moneyweb & Toyota SA