MOTORING NEWS - Any lessening of government support for the motor industry could have drastic consequences by causing multinational companies to question the need to remain in SA, Volkswagen SA (VWSA) MD Thomas Schäfer has warned.
Despite the success of the 2013-2020 Automotive Production and Development Programme (APDP) in attracting billions of rand in foreign investment, discussions with the government had revealed some senior officials were arguing that resources set aside for APDP incentives could be better used for other economic priorities, he said at a briefing on Tuesday.
Vehicle and components manufacturers can claim back up to 30% of production-related investments, among other benefits. It is estimated the programme has so far attracted nearly R50bn in investments either spent or committed.
"SA accounts for only 0.6% of global vehicle production and we are not really cost-competitive," Schäfer said. "But a lot of the disadvantages are overcome by the APDP. If it went away, it would be the immediate end of the motor industry in SA."
He added that the amounts invested in SA were small in the context of global automotive spending and that companies could afford to walk away "without a moment's hesitation".
Black supplier development
Such a response could also be triggered by growing pressure on the industry to pursue broad-based black economic empowerment (B-BBEE), Schäfer said. Multinational motor companies had made clear long ago that there was no question of relinquishing shares in wholly-owned South African subsidiaries, so the main focus would be development of black suppliers.
But the government had been no help in this regard. "We asked for a supplier database as a starting point but government didn't have one," Schäfer said.
"We had to start from scratch. We looked for any kind of black company that might be able to supply the motor industry. We even looked at bicycle tyre companies in case one day they could produce car tyres.
"To meet government targets, VWSA alone needs 500 black suppliers. We could find only 41 - with no guarantee that they will be able to grow into what we need. We understand the need for B-BBEE but, as things stand today, the targets are unachievable," he said.
Vehicle and components manufacturers can claim back up to 30% of production-related investments, among other benefits. It is estimated the programme has so far attracted nearly R50bn in investments either spent or committed.
"SA accounts for only 0.6% of global vehicle production and we are not really cost-competitive," Schäfer said. "But a lot of the disadvantages are overcome by the APDP. If it went away, it would be the immediate end of the motor industry in SA."
He added that the amounts invested in SA were small in the context of global automotive spending and that companies could afford to walk away "without a moment's hesitation".
Black supplier development
Such a response could also be triggered by growing pressure on the industry to pursue broad-based black economic empowerment (B-BBEE), Schäfer said. Multinational motor companies had made clear long ago that there was no question of relinquishing shares in wholly-owned South African subsidiaries, so the main focus would be development of black suppliers.
But the government had been no help in this regard. "We asked for a supplier database as a starting point but government didn't have one," Schäfer said.
"We had to start from scratch. We looked for any kind of black company that might be able to supply the motor industry. We even looked at bicycle tyre companies in case one day they could produce car tyres.
"To meet government targets, VWSA alone needs 500 black suppliers. We could find only 41 - with no guarantee that they will be able to grow into what we need. We understand the need for B-BBEE but, as things stand today, the targets are unachievable," he said.
