Toyota’s warning to South Africa

Toyota South Africa CEO Andrew Kirby warned that the country is entering a phase of deindustrialisation, which requires urgent government intervention.

Kirby made these comments during a breakfast seminar organised by the National Association of Automotive Component and Allied Manufacturers (NAACAM).

During the seminar, Kriengkrai Techakanont from the Thammasat University in Bangkok provided details about the automotive sectors.

In the late 1990s, South Africa and Thailand’s automotive sectors were comparable in size and key metrics.

Today, Thailand’s sector produces three times more vehicles than South Africa and employs over 400,000 people.

Techakanont said the Thai government enabled this growth and subsequent pivot into neighbourhood electric vehicles (NEVs) production through good policies.

These policies, which were flexible yet consistent, prioritised consumer demand-linked production and component localisation.

Thailand has successfully introduced tax incentives and consumer subsidies within the NEV transition.

The panel discussion reflected on what the South African automotive industry can learn from the model used in Thailand.

Toyota South Africa CEO Andrew Kirby said it was important for South Africa’s vehicle market to support local production.

He also warned that South Africa was entering a phase of deindustrialisation, which needed urgent intervention.

He said the deindustrialisation was evidenced by heightened sales of imported vehicles relative to cars made in South Africa.

Kirby added that there was a decrease in component localisation in addition to the increase in imported cards.

He said this amplified the need for a strategic industrial policy promoting domestic sales and simultaneously incentivising OEMs to localise specific components.

He suggested that the Thai policies of making locally assembled vehicles attractive to consumers were key in South Africa.

South African-produced vehicles were seen as 6% to 12% more expensive than similar vehicles produced in Thailand and sold to their consumers.

This meant that the effective use of tax policies for consumers could help unlock domestic demand for local vehicles.

Professor Justin Barnes from the Toyota Wessels Institute of Manufacturing Studies (TWIMS) concurred. Barnes said successful policy institutionalisation and implementation lead to successful industries.

He called for a flexible policy development process that fostered collaboration and fully embedded all stakeholders from the public and private sectors in its outcomes.