Future of SA car industry is seen as dependent on Africa

This is the view of Thomas Schäfer, managing director and chairperson of Volkswagen Group South Africa and head of the sub-Saharan Africa region. He is also the chairperson of the African Association of Automotive Manufacturers (AAAM). Schäfer scoffed at suggestions that the expansion by South African-based motor manufacturers into other African countries was a vote of no confidence in South Africa. 

“That is rubbish. It’s the exact opposite. Africa is South Africa’s only growth opportunity,” Schäfer said last week when Volkswagen SA launched its integrated mobility solution in Rwanda, which includes local assembly, a new vehicle business and innovative mobility services. 

“If production remains at about 600 000 cars a year in South Africa, we are never going to be sustainable. We need to grow production to 1 million or 1.5 million cars a year,” he said. 

Schäfer said Volkswagen, which had already established operations in Nigeria and Kenya and was involved in discussions with Ghana and Ethiopia, planned to play a leading role in the development of a strong automotive industry in Africa. 

He referred to the signing in April this year of the Africa Free Trade Agreement by 44 countries on the continent. Schäfer said that as chair of the AAAM he was pushing in the long term to connect the major countries in Africa to establish a pan-African automotive industry collaboration, which would probably include South Africa, Nigeria and Kenya and possibly Ethiopia. 

“The big players will only grow significantly if they work together. Everybody dreams of producing hundreds of thousands of cars and exporting them to the US or Europe or somewhere, but the rest of the developed world wants to export there as well and they are 50 years ahead of the game with high efficiency. “The only thing that Africa has is low labour costs in some countries, but South Africa hasn’t got that. So the only way to promote growth is to connect them and… everybody gets a piece of the pie,” he said. 

Schäfer said this would result in vehicle manufacturers not just having a market of 50 million people in South Africa, but 600 million people on the continent, which could lead to the creation of an automotive cluster. He believed it would be “a long road” if every country tried to go it alone and develop a massive automotive industry only for themselves. In a reference to the introduction of new trade tariffs by the US, Schäfer said the US was becoming more difficult as an export market, the European market was not growing and China was not accessible.