The Chinese are here. Whether you like it or not, they are aggressively targeting the South African automotive sector in terms of vehicle sales, as well as potential local production. And it should come as no surprise.
To quote from this month’s Viewpoint: “Chinese car manufacturers have gone from producing about 500 000 units a year in 1990 (about what SA was producing then and now), to 30 million a year. That’s a little less than the entire rest of the world’s output. The essential reason is that the Chinese producers are producing very cheap cars – BMW quality at Toyota prices, one China-based analyst told me.”
And South Africans are taking notice. Suddenly these Chinese vehicles are everywhere, no doubt you already know someone who is driving one. Maybe you are even driving one yourself.
This also comes on the back of a new tax incentive that is poised to drive the transformation of South Africa’s automotive industry towards cleaner vehicles, first drafted in February 2024, but signed off on in December last year.
Starting in March 2026, local and international vehicle manufacturers investing in new assets such as buildings, plants, and machinery, or making improvements to existing assets for the production of battery electric and hydrogen-powered vehicles in South Africa, will be allowed to deduct 150% of the investment cost from their taxable income, for that year.
While the naysayers will say that this is all a little too late, and more needs to be done over and above such incentives, which is true, we do however need to realise that in order to keep this industry alive and either keep jobs secure or create new ones, we have to move with the times.
Just because we as South Africa may take longer to fully embrace the use of electric vehicles ourselves for a number of reasons, doesn’t mean we shouldn’t be looking at measures to grow the industry locally. And if that means focussing on an export strategy in the interim, then so be it. Of course, it would defeat the purpose if we were to merely become an assembly location of already manufactured components, but one hardly thinks that will be the case.
While the rest of the world squabbles over how to deal with the Chinese onslaught, we have an opportunity to benefit from it.
Chinese Ambassador to South Africa, Wu Peng, stated in December that his government was actively encouraging automakers to invest in the country. And of course, this new tax incentive doesn’t just apply to the Chinese, but to all manufacturers, whether they align some of their strategies with it or not, only time will tell.
We also have other reasons to capitalise on local EV production in that South Africa is the world’s largest producer of manganese, we have deposits of rare earth elements and we mine nickel, all essential materials for manufacturing electric vehicle batteries. Additionally, we are the top producer of platinum which is used in the fuel cells powering hydrogen vehicles. What further incentive do you need?
As usual, this issue is full of interesting information about our industry as a whole – be sure to read about our visit to the 32nd edition of the Japan International Machine Tool Fair – JIMTOF – that took place in Tokyo in November. Your manufacturing capabilities are now really only limited by your budget and your ability to think of smarter ways to manufacture.
I am not actually sure when you should stop wishing people all the best for the new year, but here at Metalworking News we wish you all the best for the year ahead and hope that it is a promising and exciting one.
Damon Crawford
Online Editor / Journalist
