MOTORING NEWS - The Automotive Business Council naamsa has welcomed the allocation of R1,8-billion in the national budget to curb grey imports and illicit cross-border activities.
More than 300 000 of the 12,7-million cars on South African roads are grey imports. According to naamsa this figure is growing at 30 000 vehicles per annum, displacing new car sales and harming the economy.
According to naamsa CEO Mikel Mabasa, based on the suite of taxes applicable to new car sales locally, naamsa estimates that the impact of grey imports is costing the fiscus R3,8-billion per annum.
"This grows to over R4-billion when you consider the taxable income on corporate profits in the value chain." Mabasa says grey imports do not only rob the fiscus of the much-needed revenue, but hurts job creation prospects. The importation of these illegal second-hand vehicles also aids criminal activity and undermines road safety initiatives.
Infrastructure investment
The budget announcement of R791,2-billion infrastructure investment supported by the government's commitment to establishing Special Economic Zones (SEZs) industrial bases, will boost economic activities and industrial performance, and will address the widening infrastructure deficit.
The automotive sector has announced a range of investment opportunities to boost South Africa's manufacturing capacity. Some of the automotive investments announced recently by President Cyril Ramaphosa include Toyota's first production of hybrid vehicles in South Africa, local production of Nissan's Navara, Isuzu's D-MAX, and Mercedes-Benz investments.
Furthermore, Ford Motor Company announced a R16-billion investment, which will create 1 200 jobs in the coming years. The R6-billion Automotive Industry Transformation Fund is fully operational and has registered about 40 original equipment and component manufacturing companies.
Investment opportunities
The SA mining and manufacturing belt is beginning to prioritise the production of metals and minerals used in the production of electric vehicles (EVs). The booming battery sector has resulted in the increase in Platinum Group Metals shares and commodity prices as demand continues to outstrip supply.
This is a positive development for the South African automotive industry, as the forecast is that EV sales in Europe will comprise 40% by 2030 and 80% by 2040. The electric, plug-in and traditional hybrid sales in South Africa have been below the 1% mark for the past 10 years, with only 4 892 of these units sold out of the 5 694 860 aggregated market sales since 2011.
The South African automotive sector stakeholders, through the South African Automotive Masterplan (SAAM) 2035 oversight committee, are working towards creating a market-friendly regulatory framework that would enable the local production of EVs in South Africa and lowering the total cost of ownership of an EV.
SA economy
South Africa's economy is expected to rebound by 3,6% in 2021, following a 72% contraction in 2020. 65% of economists surveyed by Bloomberg said that SA will not achieve a primary budget surplus in the next four years.
On the budget highlights, the non-tax increments and a 1% corporate income tax reduction are welcomed. The decision not to increase taxes will reduce the pressures on households and businesses, and boost investor confidence.
The government has allocated more than R10-billion to purchase and deliver vaccines over the next two years and has procured an estimated 42 million vaccines to date. But, the country still faces severe economic challenges. Recently, Statistics SA announced that the unemployment rate climbed from 30,8% in the third quarter of 2020 to a record 32,5% in the fourth quarter. This is the highest unemployment rate since 2008.
The gross national debt is projected to stabilise at 88,9% of GDP by 2025/26. SA welfare grant cost-to-GDP is R385-billion, with 18,2 million registered recipients.
The baseline forecast for South Africa's energy efficiency and electric supply continues to be unpredictable. In the absence of meaningful economic growth, South Africa's fiscal strain will remain a reality for years to come.
The way forward
Stabilising the debt to GDP and reducing debt requirement is critical for fiscal prudence. Stimulus configuration for the SMMEs and starter-ups who do not qualify for standard banking procedures is needed, and will contribute immensely to the country's redistribution agenda and entrepreneurship development.
Furthermore, the advent of the fourth industrial revolution will require adequate financial resources into the country's education system. Policy coherence across the different departments and a South African business case that includes more people in the economic mainstream will be critical for the growth and development of the country.
"naamsa will continue to take the lead in the various areas in the automotive industry, contributing to transformation and growing the industry under the SAAM 2035," says Mabasa.
'We bring you the latest Garden Route, Hessequa, Karoo news'
