Automotive Sector Overview

Strategic Skills Shift Needed: An Engine of Economic Growth and Jobs

By Raine St.Claire

The automotive industry faces challenges from restrained consumer spending, high interest rates, and supply chain disruptions due to geopolitical tensions. The country’s modest economic growth, though still positive, poses a significant hurdle for the new vehicle market, which is closely tied to GDP growth.

Despite a decline in new-vehicle sales in 2023, the new energy vehicle (NEV) market, driven by government and consumer efforts to address climate change, is expected to grow strongly by 21% in 2024.

Key Performance Indicators

• Contributed 4.9% to GDP in 2023

• Component-related investment in 2023 R4.5-billion

• 22 manufacturers for cars, busses and commercial vehicles

• 7 major vehicle manufacturers/assemblers for light, medium and heavy commercial vehicles and busses

• 21 companies engaged in the importation and distribution of new motor vehicles

• 500 automotive component suppliers, including 180 first-tier suppliers

Export Values

• Total export value of vehicles and components: R227.3-billion

• Record export value of vehicles: R157-billion

• Record export value of components: R70.3-billion - Export value increased from R20.5-billion (2021) to R227.3-billion (2023)

New Vehicle Sales

• 45 075 units 2023 Q4

• 49 986 units 2022 Q4 - Decline of 4 911 units (9.8%)

Commercial Vehicle Sales (Q3 2023)

• Increase of 11.2% to 48 611 units

• Increased sales in the heavy commercial vehicle sector show a greater reliance on road transport due to rail inefficiencies.

Total Industry Employment

• ±457 000 direct employees

• ±50 000 indirect employees

• 23.6% Women

• New vehicle manufacturers employ 33 620 people

• Automotive component manufacturers employs 78 874 people

• Indirectly supports 1.5-million people

Energy Vehicles

• New Energy Vehicle (NEV) Sales (Q3 2023) - increased by 112% (17 industry brands); 2019 units sold, up from 953 units (Q3 2022)

• Battery electric vehicle sales - 720 units up from a total of 502 sales in 2022

The Impact Of NEVS On Employment: Balancing Job Displacment and Creation

The South African automotive industry, including vehicles and components, is a billion-rand industry, underscoring the vital role of the component sector in the country’s industrial economy. However, this number is expected to be greatly influenced by the country’s move from internal combustion engine (ICE) vehicles to new energy vehicles (NEVs), causing many automotive sector workers to be displaced.

It is estimated that AI-driven changes will substantially reduce blue-collar jobs, and approximately 67% of South Africa’s component exports will be lost as a result, necessitating fundamental labour market restructuring.

This information is according to Deputy Finance Minister Dr. David Masondo. During his speech at the NAACAM 2023 show titled ‘Growing the SA Automotive Component Manufacturing Sector: A State Perspective,’ Dr. Masondo highlighted the transformative shifts driving South Africa’s automotive component manufacturing sector.

He stressed its economic importance, especially in local component manufacturing, and emphasised the need for new job opportunities, particularly in NEVs. To tackle these challenges, the government’s role in supporting the industry is crucial. Dr. Masondo also underscored the importance of reinvestment, workforce reskilling, fiscal assistance, support for local OEMs, and effective policies to drive South Africa’s NEV industry and facilitate the electrification transition.

There will be a demand for experts in sustainable manufacturing, environmental engineering, and renewable energy.

The Focus Should Be On Skills Development and Up-Skill Of:

• Designing, engineering, and manufacturing electric vehicles and related components

• Integrated apprenticeships with on-the-job training

• Professional development programmes

• Roles in designing, developing, and maintaining EV charging stations

• Emerging occupations like EV technicians and battery engineers

“As we look towards the future, embracing electric vehicles is not merely a choice; it is imperative for the sustainability of our planet and the prosperity of our nation.” Deputy Finance Minister Dr. David Masondo

Sources: |ITweb | Engineering News | Stats SA|InvestSA | Naamsa