Let the automotive industry get back to work
As we move towards an easing of national lockdown restrictions that come into effect on 1 May 2020, our government has published a schedule of services to be phased in as part of the COVID-19 Risk-Adjusted Strategy.
Many industries, including automotive production, can slowly resume under the current Level 4 restrictions, allowing thousands of employees to resume activities that contribute to their respective livelihoods. The problem that has been identified though is that motor retail, which includes the sale, servicing and repair of vehicles, as it stands, will only be allowed to resume its operations under either Level 3 or 2.
At this stage, Level 4 restrictions are open for comment before being gazetted. At the time of writing, the gazette was scheduled to be published tomorrow, Wednesday 29 April 2020. In my opinion, the resumption of the automotive industry as a whole is essential and its importance cannot be underestimated. A recent report by Deloitte surmised that in 2018, some 6.9% of our local GDP came from the automotive segment of which 4.4% is vehicle manufacturing and 2.5% is automotive retail.
To put that into perspective, the entire manufacturing segment as a whole makes up 11.76% of the GDP, meaning that we need the likes of BMW, Ford, Isuzu, Mahindra, Mercedes-Benz, Nissan, Toyota and Volkswagen to continue producing cars, let alone the other manufactures that sell vehicles and parts and subsequently employ South Africans locally. By only allowing manufacturing to resume, a large portion of an industry that contributes massively to our local GDP will be unable to operate and therefore contribute.
Aside from the industry’s contribution to our nation, it also employs a massive number of people, whose jobs are less secure every day that they aren’t allowed to work. An increase in unemployment is not only a bad sign for the sector, but as we know, it becomes a massive socio-economic problem.
Global trends are usually a good predictor of local happenings, so when Moody’s predicts a 14% drop in global passenger vehicles sales for 2020, we may have expected something similar. New data suggest that 14% would be the best-case scenario for South Africa though with 30% being a more realistic figure. A drop of 14% equates to 13.5 million passenger vehicles globally. From a local perspective, if we take the total passenger vehicle sales for South Africa in 2019, which was 355 384 units and reduce it by the estimated 30%, we’ll see 106 615 fewer passenger cars being sold locally in 2020. This will leave the global and local vehicle segments in a deeper mess than during the 2008 financial crisis and may require urgent government intervention. With this in mind, the motivation to open up the entire sector makes even more sense as an attempt to minimise the contraction of growth as much as possible.
Our cars are essential
Many of us will resume work as of a next week, or 6 May 2020. This means that those that are fortunate enough to have a vehicle for personal mobility will be back out on the road, driving to work. The five-week hiatus that many of our cars have had may have affected various components in our car. From batteries to brakes, to drivetrain components, our cars are mechanical items that require regular checks and servicing.
Although modern cars are, for the most part, reliable, the knowledge that there is an establishment that can repair your vehicle provides peace of mind. For those of us with vehicles under warranty, the risk of attempting to fix something on our own and subsequently voiding our warranty would be too great. Let’s also consider the fact that a large portion of car owners wouldn’t even know where to start when it comes to fixing things on their own.
If our vehicles are our transportation to an essential service, then, by extension, our vehicles are essential, like electricity is for many of us to perform our duties. Allowing more road users the freedom to travel to work, but then not allowing the institutions that repair and maintain their vehicles to operate is like not having service technicians working for a power company during the lockdown. I genuinely hope that the government allow the entire automotive sector to re-open; it will save thousands of jobs and allow this important market to assist our country in emerging from this crisis.
