AT the close of SA Auto Week 2024 held in Cape Town last week, Naamsa | The Automotive Business Council CEO Mikel Mabasa hosted a press conference where he mentioned key highlights from the event and responded to President Cyril Ramaphosa’s address.
Mabasa said Naamsa welcomed the positive policy pronouncements made by President Cyril Ramaphosa during the South African Auto Week 2024. “His recognition of the automotive industry as a key pillar of South Africa’s economy, alongside his commitment to advancing the sector through transformative and sustainable policies, resonates deeply with Naamsa and with all our member companies,” said Mabasa.
He outlined a number of points from the President’s address which the association regards as particularly encouraging. Among these is a reference to comprehensive New Energy Vehicle guidelines. “Naamsa welcomes the President’s announcement on the finalisation of comprehensive NEV policy guidelines. The inclusion of alternative vehicle technologies such as hybrids and plug-in hybrids, and very importantly, alongside incentives for manufacturers and subsidies for consumers, is a crucial step towards the widespread adoption of cleaner, more sustainable vehicles. These measures will ensure that South Africa remains part of the global supply chain as major trading partners shift towards EVs,” he said.
Mabasa also recognised the government’s commitment to improving the operational performance of key sectors like energy, freight, and logistics, all of which have direct impacts on the automotive industry. He said ongoing projects, such as revitalising the Port of Durban and upgrading the Gauteng-Eastern Cape railway line, are essential to our industry’s continued success, he said.
Key discussion points and insights
Mabasa reflected on some of the key discussion points and insights from some of the SA Auto Week 2024 Panel Discussions. These are noted as follows:
- Alternative NEV Powertrains – The Benefits of Hydrogen:
Panelists highlighted South Africa’s slow progress in adopting hydrogen and NEVs. The discussion emphasised the need for accelerated investment and policy support to unlock the potential of hydrogen as a sustainable energy source for the automotive sector, underpinned by the comprehensive development of refueling infrastructure. It was suggested that pilot use case adoption be driven via opportunities such as the conversion of mining fleets.
2. Fleet Sustainability in SA:
Road freight industry leaders identified key challenges, including regulatory hurdles and the transition to sustainable practices. The panel underscored the need for improved infrastructure and collaboration to achieve fleet sustainability and grow the economy. Driver and fleet training, the co-existence of road and rail transport, public-private sector partnerships, and an automotive GNU were underscored with the intention to move from thought leadership to action leadership.
3. Trade and Opportunities with SADC-EU EPA and AGOA:
The potential for stronger collaboration and trade partnerships across Africa and beyond was explored, with panellists calling for regulatory reforms to enhance trade and trade support for regionally distributed value chains, thus driving regional growth. Both agreements are currently under review and the extension of AGOA as well as amendments to the SADC-EU EPA to address the strict 60% rule of origin for electric vehicle exports from both the EU and South Africa due to a lack of battery manufacturing were imperative.
4. Africa’s Mineral Industry Strategy:
Africa’s vast mineral resources for energy transition remain underutilised. Panellists urged the continent to focus on green industrialisation, local beneficiation, and battery production to reduce reliance on exporting raw materials. A noted point was that Lithium battery minerals are not the most efficient travelling minerals and that for the value chain to thrive, local beneficiation is a logical next step if SA minerals pivot towards battery manufacturing.
5. Challenges in Developing a Robust Battery Value Chain:
With infrastructure challenges and competition for raw materials, panellists emphasized that Africa must strategically develop parts of the battery value chain, leveraging its rich mineral reserves to compete globally, and look to develop allied opportunities such as fixed energy storage to create economies of scale to support localisation.
6. Emerging Trends and Disruptions from Imported Brands:
The SA automotive market faces affordability issues, driven by low incomes and rising prices. This has led to the emergence of new competitors offering affordable options, disrupting the market and highlighting the need for strategic responses from local players. A historical context for the trend was reflected, with an alarm raised on how similar new market entries are common when it’s a buyer’s market and with an economic crisis, the same establishments leave the country. The excessive tax burden on a vehicle in South Africa is a root cause of the problem with a luxury tax now being imposed on entry-level vehicles.
7. Cleaner Fuels 2: Embracing Cleaner Fuels Technologies:
There was a unanimous call to support the adoption of Cleaner Fuels 2 from 01 July 2027, as the sector could not support additional delays. The consensus was that the further delays on the introduction of these improved fuel specifications, compounded by existing adulteration and contamination of fuel would have a long-term impact on the ability of OEMs to introduce improved vehicle technology and also present a significant risk to consumer safety.
8. Developmental Finance to support Autos in Africa
Africa needs to industrialise, beneficiate and diversify its exports. African businesses comprised 70% SMMEs creating massive employment but financial inclusion is a major hurdle for these enterprises. The IDC, AITF and ABSA shared their specific initiatives and their focus on including women. Given the scale of unemployment in South Africa, the importance of financial inclusion models to cater for small enterprises was highlighted to be incorporated into mainstream activities.
Mabasa thanked the President and the Minister of Trade, Industry and Competition for their continued support and leadership, and said Naamsa looks forward to collaborating with government, and stakeholders to harness the opportunities that lie ahead. “Together, we can position South Africa as a global automotive hub within the context of the African Continental Free Trade Area (AfCFTA), and build a globally competitive, green, and inclusive automotive industry that serves as a model for industrial progress,” he said.
