While the Automotive Production and Development Programme (APDP) has led to billions of rand being invested in South Africa’s motor industry, Thomas Schäfer, Volkswagen SA (VWSA) managing director, said government support was lacking and many multinational companies would be able shut down their operations in SA without much to lose if this continued.

In an address last week, Schäfer said some believe that resources that have been set aside for APDP incentives could be better used for alternative economic priorities.

The APDP was fully implemented in January 2013 and had a view to steer the automotive industry towards producing approximately 1,2 million vehicles by 2020. It was also intended to expand the domestic supplier base. To date, the programme has attracted almost R50bn in investments.

Last year, Trade and Industry Minister Rob Davies said it was extremely difficult to achieve significant expansion and deepening of the local supplier base under the prevailing economic conditions. Schäfer believes that the programme has kept SA’s motor industry afloat and indicated that many challenges have been overcome by the programme. Without the programme, Schäfer also felt like the industry would entirely collapse.

How B-BBEE has affected the industry

Schäfer said VWSA was always on board to promote broad-based black economic empowerment (B-BBEE) within the company, however no help was received from government.

“We asked for a supplier database as a starting point but government didn’t have one,” Schäfer said.

He explained that VWSA tried to create its own database by seeking out black companies that could have been possible suppliers in the motor industry, including bicycle and tyre companies, however there was no guarantee that any of the companies they earmarked would eventually grow into what VWSA required.

The company currently has 41 black suppliers and needs a minimum of 500 in order to meet government requirements. Schäfer said that right now, the current requirement was “unachievable”.

Davies has reiterated that the current situation in the industry was characterised by an extremely low participation of blacks, and added that this was prevalent through all parts of the sector’s value chain including distribution, retail and after-sales/service.

“The levels of support afforded to the industry in SA need to be reflected through an appropriately transformed sector,” he said.