[Letter] Higher duties on imports won’t fix auto industry

Raising duties on Chinese and Indian automotive imports may feel good in the short term but will not make South Africa’s domestic automotive industry more competitive over the long term (SA weighs antidumping duties on Chinese and Indian cars, January 28).

While one can rightly highlight concerns regarding how other countries support and boost their various exports, doing so risks distracting from the difficult but necessary changes to South Africa’s domestic situation.

As with any form of protectionist trade policy, higher duties can shield a domestic industry or product from competition. Jobs in that industry can also be “saved”, at least in the short to medium term. But raising duties leaves unaddressed the supply and input side of that industry’s domestic economy and environment.

In the South African context, traditional automotive manufacturers have been forced to contend with unreliable electricity supply and rising electricity prices, unreliable railways and ports, a consistently high rate of crime, inconsistent service delivery in the cities in which they are based, labour unrest and inconsistent, inflexible and unresponsive policy direction from government.

All of these factors have contributed to making those automotive products relatively more expensive and less competitive. No duty will fix the situation.

For the country’s traditional manufacturers, they and their parent companies in Europe and America, and in some makes and models in Japan, have failed to realise the challenge posed by Chinese and Indian rivals in terms of features and cost-effective options offered to consumers.

With the South African consumer under immense strain for more than 15 years now, any opportunity to save some money while still buying a quality motor vehicle will be seized. That situation is not going to change soon, meaning the number of Chinese and Indian vehicles sold is set to increase even further and faster.

The traditional South African automotive players need far more than tariffs from government; they need the political will to address the factors that drive up costs and make doing business in South Africa unnecessarily expensive and risky.

Article originally appeared here.