Transformation in automotive industry non-negotiable - Davies

Cape Town – Imports of automotive components have surged to historical levels at R50bn, while local content in vehicles have declined to below 39%, affecting employment in the sector, said Trade and Industry Minister Rob Davies on Wednesday. 

Speaking at the inaugural National Association of Automotive Component and Allied Manufacturers (NAACAM) Show and Localisation Indaba, Davies said the auto component employment in South Africa has remained a concern, as it has “somewhat stagnated”. 

“Through the 2035 SA Automotive Masterplan process,” Davies said, “government seeks to arrest some of the drawbacks in the sector, while also ensuring industry growth over the long term. This Masterplan process is also making us realise that to ensure the long term sustainability of the automotive assembly and component industry, all the partners which include government, industry and labour have to make sacrifices.”

Davies pointed out that transformation of the automotive industry is non-negotiable. 

READ: DTI sweetens procurement transformation pill - Davies 

“Transformation will ensure that the automotive industry is representative in line with national demographics profile,” Davies said. “Government will therefore make supply side support conditional to industry transformation."

Discussions are continually taking place on developing and growing the domestic automotive component industry towards higher levels of localisation, employment creation, and improved competitiveness, but it has to go hand in hand with transformation, Davies emphasised. 

He acknowledged that the industry is vital to South Africa’s industrialisation, specifically and most importantly to the manufacturing sector of the economy. 

READ: Chinese to invest R11bn in SA car industry

The industry contributes 7.5% to South Africa’s GDP and directly employs 113 000 people in the vehicle assembly and components supply industry.

“Importantly 82 000 of this total employment figure are directly employed in the auto component industry,” said Davies. 
 
With the correct support the industry can create the much needed jobs and the higher the degree of localisation, the more jobs can be created. 

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