The South African Automotive Industry in Globalising World: What has Happened to Imports?

This paper examines the impact of globalization and automotive policy on imports of automotive products since the early 1990s. A series of important policy interventions, Phase VI of the local content programme (1989) and the Motor Industry Development Programme (1995), have liberalised imports and encouraged exports. The industry is now structurally stronger and more competitive. Investment and exports have increased but vulnerabilities remain. Imports have grown rapidly and the industry has still not achieved a sufficient volume of production to realise full economies of scale. Another constraint is South Africa's location, remote from major automotive markets. After a long period of heavy protection followed by liberalisation and export support, it is now time for the sector to move towards a balanced growth path on the basis of policies which impose a more neutral incentive structure.