top of page

The South African Automotive Masterplan - (SAAM) '35

In 2018, the government of South Africa implemented a new automobile policy known as SAAM '35 after realising the benefits of well-designed automotive incentives (South African Automotive Masterplan)

South Africa's automobile industry ranks third among our economic sectors, behind mining and financial services. On a global scale, South Africa's automobile industry ranks a respectable thirteenth.

The goals of SAAM '35 are to:

  1. Make South Africa's automotive industry more competitive on a global scale

  2. Boost the sector's impact on the long-term growth of our productive economy.

  3. Making people's lives better through their work in the sector and beyond

  4. Adding value beyond regulatory requirements

The set goals to achieve the policies` success are

South Africa faces a few challenges in achieving these objectives:

  • Increase localization - Recent policy changes have placed a greater emphasis on localization, shifting the focus from imported to local material. Nonetheless, determining the intended amount and quality of localization is necessary. Local suppliers must be developed and/or established; if done correctly, this will benefit all stakeholders in the long run.

  • Improve Technology and Plants – According to and related to the Global Green Automotive R&D base, of which Europe is the largest contributor, global adoption of electrical vehicles sets out a major job for adoption inside South Africa. South Africa ranks 13th in the world in terms of carbon dioxide emissions from fuel combustion in tonnes, despite having the ninth biggest population.

  • Upskilling - To guarantee that current and new skill sets are learned, continuous skill development and talent-specific upliftment will be required.

  • Co-op recycling partnerships - Many byproducts accumulate from the manufacturing phase all the way to the consumer level. Audi, Reiling Glass Recycling, Saint Gobain Glass, and Saint Gobain Sekurit, for example, wish to recycle damaged auto glass into beverage bottles or insulating materials, with the best results focusing on new conforming windowpanes.

In 2018, the automotive industry contributed 6.8% to GDP (4.3% produced and 2.5% retail). Exports were valued at R180 billion, accounting for 14.3% of the South African export market. South Africa, in comparison to other global rising economies, has a very low localization rate of 38.70%; SAAM strives to correct this by widening and deepening local value chains and integrating industry into the domestic economy. At its root, meaningful localization is part of value beyond compliance. It promotes innovation and productivity while also aligning economic performance with social advancement, resulting in inclusive growth.

There are currently 22 automotive manufacturers in South Africa and 350 auto component manufacturers, South Africa’s automotive industry is dominated by OEMs and tier 1 suppliers, with few tier 2/remaining tier suppliers.

With OEM`s (Original Equipment Manufacturer)being the market leader, Tier 1 Suppliers being the main suppliers to the OEM market and Tier 2 Suppliers which are not only automotive industry supply specific.

Feltex automotive, a long-established textiles and acoustic component supplier has announced that they acquire minority stake in Auria South Africa, a global tier 1 supplier of vehicle flooring, acoustical and fibre-based products. In addition, Isuzu invested R580m in the local supplier market (Tier 1) aligned to the SAAM `35 policy.

Tier 2 Second tier suppliers dominate the automotive supply chain globally, accounting for 50% of value addition. These suppliers are frequently the driving force behind localization and are critical for deepening skills, employment, and value chains in the host country. South Africa must boost and expand the growth and value input of tier 2 suppliers in the industry. "By 2035, the South African automotive industry must generate 485 new enterprises in Tier 2 automotive products to accomplish this goal." "Half of that must be locally and black-owned," Woodward said. Despite not selling directly to vehicle manufacturers, Tier 2 enterprises usually supply parts that end up in cars."

The Department of Trade and Industry (DTI) provides many incentive programmes to the automotive industry, which necessitates the use of dedicated assurance services to guarantee that monies are used properly. As a result, automotive firms must manage regulatory compliance risk through proactive identification methods and effective plans for prompt mitigation.

In general, all changes to regulatory matters necessitate organisations adjusting their internal procedures in order to understand and correctly apply new requirements.

Covid-19 posed issues for the automotive sector, as it did for all industries worldwide. Despite the recent flood disasters in KZN and demand supply importation delays, the auto sector has been recovering quickly, with an increase of 7.6% year on year for new car sales (June 2021 - June 2022) and 11.4% for the first biannual half (Jan-Jun 2021 - Jan-Jun 2022).

With the future looking bright for the Automotive Industry in South Africa, Global compliance with the Quality of products, Environmental, Health and Safety, and Social impact is of vital importance to be implemented and utilized on a day-to-day basis on processes. Day-to-day utilization of Ariscu will assist in legal compliance whilst being able to track and comply with:

· Upskill and development of Employees

· Change/implement and track new processes

· Risk Management and mitigation

· Audit and reporting on milestones


Deloitte - Rooting SA: Strengthening the local automotive industry 2019

Automobil May 2022

101 views0 comments


bottom of page