Both the MIDP and APDP have possibly delivered on everything else except "affordable motor vehicles for the local market", writes Victor Kgomoeswana.
Well-known commentator Aubrey Matshiqi told a networking dialogue with leaders of state-owned enterprises that South Africa urgently needed some reimagination to swing the fortunes of our nation. Matshiqi might as well have been talking to our auto industry, which this week reported a 4% drop in new car sales.
Reimagining means, according to the Collins Dictionary, to "imagine again or in a different way". If imagining is about seeing things that do not exist as yet, then reimagining is even more demanding. But our current desperate economic circumstances crave nothing less.
This is not about collusion or price-fixing in the auto industry, even though manufacturers of imported components were the subject of an investigation by the Competition Commission in 2014.
It is not an accusation against the industry either. Rather, it is a call to the original equipment manufacturers (OEMs), such as Toyota, BMW, Nissan, General Motors and Ford, to rethink the pricing of their vehicles.
Capital expenditure by the seven major vehicle producers between 2010 and 2015 amounted to more than R24 billion, according to then president of the National Association of Automobile Manufacturers of SA (Naamsa) and chief of Toyota SA, Dr Johan van Zyl.
The Automotive Production Development Programme (APDP) sought to produce 1.2 million vehicles by 2020.
This has since been readjusted. Production and sales had been rising until their 2008 peak.
Looking at the sales figures by Naamsa for 2015, 341 025 vehicles were sold; 112 566 (33%) of these locally.
The rest went abroad - where each unit fetches a higher price and the costs of driving a car are higher, at least according to a survey by marketing agency Mediaworks.
Conducted on behalf of Carfinance247, this comparison pegged the annual cost of buying and owning a car at £11 221 (R180 000) in South Africa, versus £18 901 (UK), £13 770 (Brazil), £11 605 (Russia) and £8 768 (India).
The more useful benchmark is with our fellow Brics countries, instead of the UK.
The UK figure is included to demonstrate that there are more incentives to sell cars produced in South Africa by the OEMs to export markets, instead of locally. Before the current APDP, we had the Motor Industry Development Programme (MIDP), introduced in 1995 to "produce more affordable motor vehicles for the local market", among others, as stated on the SA Revenue Service website.
In return for such benefits for the OEMs as duty-free allowance, import rebate credit certificates and production asset allowance, it was expected that the MIDP would increase local production, lower manufacturing costs, promote foreign investment, encourage the creation and retention of jobs, etc by the OEMs located in places such as Rosslyn (BMW, Nissan), East London (Daimler), Durban (Toyota) and Uitenhage (VW).
To their credit, some members of Naamsa have invested heavily in their South African production capacity.
Van Zyl reminded us in May 2015 that "employment by vehicle manufacturers, on the back of higher production numbers, has increased by 1 200 to more than 31 000 jobs over the past 15 months".
Why would one ask more of an industry that has done so much for South Africa’s manufacturing and for the improvement of its trade deficit, compared with the others? Because both the MIDP and APDP have possibly delivered on everything else except "affordable motor vehicles for the local market".
That was part of the deal, and somehow we are not able to agree on what constitutes affordability.
Affordability obviously results from several factors, some beyond the control of the auto industry.
Still, a 4% drop now and the projected annual sales of 104 000 locally in 2017 point to unaffordability. Compare the 104 000 to 125 454 cars sold in 2008 - during the global credit crunch - and 94 379 in 2009.
Industry experts might disagree, but I blame this on nearly 100% mark-up policy by most of our car dealers; because it is not uncommon, I hear.
It is time to reimagine our pricing, folks. Lower margins, higher volumes. Our economy needs that.
* Victor Kgomoeswana is author of Africa is Open for Business, a media commentator and public speaker on African business affairs, and a weekly columnist for African Independent. Twitter Handle: @VictorAfrica
** The views expressed here are not necessarily those of Independent Media.