South Africa is reviewing its Automotive Production Development Programme (APDP). There are challenges facing this process.

In 1995 the Motor Industry Development Programme (MIDP) replaced the pre-1994 automotive local content programmes. The APDP, whose tenure ends in 2020, was adopted in 2013 to replace the MIDP.

Successive automotive export manuals show that automotive production is South Africa's largest manufacturing sector. Statistics for 2017 have yet to be publicly confirmed through the release of the 2018 automotive export manual.

In 2016, vehicle and components production accounted for 33% of South Africa's manufacturing output. The industry alone contributed 7.4% to GDP. Its exports accounted for R171.1-billion, representing 15.6% of total exports.

Concerns regarding automotive policy review are so far those expressed publicly by original equipment manufacturers (OEMs) that make up the vehicle assembly sector. The OEMs are wholly foreign-owned.

One of the industry's chief executives threatened in August that automotive production would stop tomorrow in South Africa if the review of the APDP, especially the automotive incentive scheme (AIS) benefits, were to be linked to black economic empowerment (BEE).

It was warned that there would be no reason to have production in South Africa, a country far away from big markets, should the review remove export credit incentives.

An examination of these production shutdown threats points to the fact that the OEMs are interested in capital accumulation.

However, there can be no doubt there are problems with the narrow BEE regime dominant in South Africa. The model is not aimed at uplifting the quality of life of the working class through decent work and direct economic empowerment.

The dominant BEE benefits a few individuals through "empowerment" to participate in the regime of private accumulation of wealth from labour's hard work. This has contributed to deepening labour exploitation. Class inequality - which is no longer interracial but is to be found worsening among the formerly oppressed - has widened.

What is equally worrying is the policy misunderstanding and the production shutdown aggression directed against increased local value addition.

The replacement of the MIDP with the APDP already shifted from what could be construed as an exclusive exports subsidisation to production incentives for domestic and exports markets alike.

In 2016, total vehicle assembly sector employment was 30 953. That of the components sector was 82 000. Automation, with robotisation, is deepening. Every robot that enters the space knocks out a certain number of workers. Robotisation has made it possible to produce more output with fewer workers.

Employment growth is unlikely in the assembly sector without growth in production volumes sufficient to that end.

The employment potential of the automotive components sector must be harnessed.

In addition, import surges of vehicles with an engine capacity of one litre (1 000 cc) or less may likely cause serious problems. This is the implication of duty free imports of these entry-level vehicles from the European Union.

All vehicle imports, regardless of their engine capacity, must therefore be subject, at least, to import duties that were designed for the APDP. 

Mashilo is SACP spokesman and writes in his personal capacity