{"id":817783,"date":"2025-03-21T10:00:00","date_gmt":"2025-03-21T08:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=817783"},"modified":"2025-03-21T09:12:45","modified_gmt":"2025-03-21T07:12:45","slug":"ford-joins-the-chorus-of-warnings-for-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/motoring\/817783\/ford-joins-the-chorus-of-warnings-for-south-africa\/","title":{"rendered":"Ford joins the chorus of warnings for South Africa"},"content":{"rendered":"\n

Ford is the latest carmaker to voice concerns over South Africa’s challenging operating environment, which could risk the country’s position as an investment destination for vehicle manufacturing. <\/p>\n\n\n\n

Ford Africa president Neale Hill has expressed concerns over South Africa\u2019s ongoing infrastructure inefficiencies, particularly in transport and logistics, which are significantly impacting local carmakers and their ability to remain competitive.<\/p>\n\n\n\n

Speaking to Business Day<\/a><\/strong>, Hill pointed to the country\u2019s struggling transport infrastructure, stating that Transnet’s inefficiencies are creating significant hurdles for automotive manufacturers.\u00a0<\/p>\n\n\n\n

\u201cWe\u2019re still mostly moving vehicles by road, and we\u2019re too heavily reliant on Durban as a port,\u201d Hill said. <\/p>\n\n\n\n

The increased dependence on road freight due to unreliable rail services raises costs and slows production, making South African-made vehicles less competitive globally.<\/p>\n\n\n\n

\u201cLoad-shedding, while less frequent, has been replaced by another major concern\u2014logistics bottlenecks.\u201d <\/p>\n\n\n\n

Years of underinvestment in Transnet\u2019s rail and port systems have led to costly delays in moving vehicles and components. <\/p>\n\n\n\n

Despite some improvements in the rail corridor between Gauteng and Durban, Hill said Ford is still forced to rely on trucking its vehicles along the N3 freeway. <\/p>\n\n\n\n

Ford\u2019s Silverton plant produces approximately 640 to 660 Ranger units daily, with 65% destined for export. <\/p>\n\n\n\n

However, South Africa\u2019s rail freight, which should be a cost-saving advantage, remains as expensive as road transport\u2014unlike in other countries where rail is typically 30% cheaper.<\/p>\n\n\n\n

Hill warned that these issues threaten future investments. \u201cSouth Africa competes with plants around the world to assemble cars, and these factors come into play when multibillion-rand decisions are made about future investments in the country,\u201d he said. <\/p>\n\n\n\n

If the country continues to struggle with transport logistics, foreign investors may start looking elsewhere for production opportunities.<\/p>\n\n\n\n

Ford is one of seven original equipment manufacturers (OEMs) producing cars in South Africa, contributing around 5% to South Africa’s GDP.<\/p>\n\n\n\n

The others include BMW, Mercedes-Benz, Nissan, Isuzu, Toyota, and Volkswagen, with Stellantis and Mahindra planning to establish local factories.<\/p>\n\n\n\n

Other carmakers have similar concerns<\/h2>\n\n\n
\n
\"\"<\/a>
Ford Africa president Neale Hill<\/em><\/figcaption><\/figure><\/div>\n\n\n

Ford\u2019s concerns echo those of Volkswagen Group Africa chair and MD Martina Biene, who also raised alarms<\/a><\/strong> over the deteriorating business conditions for car manufacturers in South Africa.<\/p>\n\n\n\n

Speaking at a National Automobile Dealers\u2019 Association (NADA) event, Biene highlighted how local carmakers are burdened with additional costs due to government failures while struggling to compete with cheap imports.<\/p>\n\n\n\n

Biene pointed out Volkswagen\u2019s significant investment in backup power solutions at its Kariega facility to mitigate the effects of an unreliable power supply.<\/p>\n\n\n\n

\u201cWe now have two generators that cost R130 million because we need quite a bit of power, but every day I run those generators, it costs R1.6 million,\u201d Biene said.<\/p>\n\n\n\n

These expenses, she added, ultimately get passed on to consumers, making locally produced cars more expensive.<\/p>\n\n\n\n

She further stressed that South Africa\u2019s position as a competitive vehicle manufacturing destination is under threat. <\/p>\n\n\n\n

\u201cThere are 117 Volkswagen plants in the world, and that is my biggest competition in the market,\u201d Biene said, adding that infrastructure failures and high operating costs make it difficult for the local plant to secure future investment.<\/p>\n\n\n\n

Beyond electricity concerns, Biene also pointed to transport and logistics as significant deterrents to new investment.\u00a0<\/p>\n\n\n\n

Like Hill, she criticised the inefficiencies in South Africa\u2019s ports and rail systems, which drive up costs and cause significant delays. <\/p>\n\n\n\n

These challenges, coupled with an influx of cheap imports from Asia, put local manufacturers at a disadvantage.\u00a0<\/p>\n\n\n\n

Volkswagen employs around 4,000 people in South Africa but faces increasing competition from brands that import vehicles at much lower costs, contributing little to the country\u2019s economy.<\/p>\n\n\n\n

According to Biene, manufacturers in countries such as China benefit from heavy government subsidies, allowing them to price their vehicles more competitively. <\/p>\n\n\n\n

In contrast, South African carmakers must absorb additional costs caused by government inefficiencies, making it increasingly difficult to compete.<\/p>\n\n\n\n

Toyota South Africa Motors (TSAM) CEO Andrew Kirby has also raised similar concerns, particularly about the surge in Chinese vehicle imports and its impact on local production. <\/p>\n\n\n\n

While competition is generally welcomed, Kirby argues<\/a><\/strong> that the rapid influx of imported vehicles creates an uneven playing field and accelerates de-industrialisation.<\/p>\n\n\n\n

As a result of the increase in cheap imports, he noted that South Africa\u2019s vehicle production has been significantly affected in recent years. <\/p>\n\n\n\n

Historically, Kirby explained that local factories assembled cars using parts from domestic suppliers, a process known as Completely Knocked Down (CKD) production. <\/p>\n\n\n\n

\u201cThis approach is critical for job creation and economic growth. However, since 2018, CKD production in South Africa has declined by more than 11%,\u201d he said. <\/p>\n\n\n\n

\u201cInstead, more vehicles are being imported as fully built units, particularly from Asia, which reduces local job opportunities and investment in the manufacturing sector.\u201d<\/p>\n\n\n\n

Kirby linked this trend to South Africa\u2019s Automotive Production Development Programme (APDP), specifically Chapter 98, which provides free trade rebates and semi-knocked-down (SKD) options, making importing vehicles more attractive than local assembly.\u00a0<\/p>\n\n\n\n

\u201cFor South Africa\u2019s car industry to succeed, we need to focus on growing CKD production and using more locally made parts,\u201d Kirby said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ford is the latest carmaker to voice concerns over South Africa’s challenging operating environment. <\/p>\n","protected":false},"author":92,"featured_media":817784,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11119],"tags":[2042,853,2041,2138,9547],"class_list":["post-817783","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-motoring","tag-ford","tag-south-africa","tag-toyota","tag-transnet","tag-vw"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=817783"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817783\/revisions"}],"predecessor-version":[{"id":817795,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/817783\/revisions\/817795"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/817784"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=817783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=817783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=817783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}