State of South Africa’s Motoring Industry – Wide-ranging interview with Naamsa CEO Mikel Mabasa

Ciro De Siena: Hello and welcome back to not the Cars. cosa podcast studio. I am in Johannesburg for a really, really important and special reason. I have a special guest here today on the Cars. cosa podcast. We have a big announcement to make and without further ado, let me introduce Michael Mabaser. The CEO of NAMSA, the Automotive Business Council of South Africa.

Michael, how are you?

Mikel Mabasa: Chiro, I’m in great shape. I’m, I’m, I’m good. I’m good. Fantastic. Thank you for

Ciro De Siena: your time.

Mikel Mabasa: Thank you for having me.

Ciro De Siena: Wonderful to meet you. I’ve heard you on radio. I’ve seen you on TV and it’s, it’s wonderful to be in your company. So thank you for your time. Thank you for inviting us. So, Kazakosa, NAMSA, ABSA, it’s a really cool triangle that’s happening.

We are. Over the moon that this is all happening and we’ll, we’ll take our audience through it now, but, um, the cars are COSA consumer awards are back powered, sponsored by ABSA. I keep saying powered and then I get shouted at. So sponsored by ABSA and, uh, and we’re here to chat about NAMSA’s involvement, but let’s start with NAMSA itself because NAMSA is not necessarily a brand.

They’re, they’re everywhere and you’re woven into the automotive industry. But perhaps not what we would say is a public facing organization. So let’s start with a simple question. What is NAMSA?

Mikel Mabasa: Yeah, fantastic. Thank you very much once again for having us. It’s good to see you and good to be here. And NAMSA is obviously a, an industry association that represents the automotive industry in South Africa.

Um, a lot of people do not know that. In fact, NAMSA is now 89 years old, 89, 89 years old. So we were born in 1935 and, um, at the time, NAMSA was purely representing, uh, manufacturers and we used to be called the National Association of Automobile Manufacturers of South Africa. That’s what Namsa represented at the time.

And, uh, that brand obviously evolved over time. We started obviously bringing in a number of other key stakeholders into our ecosystem, uh, because the automotive industry was becoming absolutely dynamic. Uh, South Africa also, you know, uh, went into the retailing space in a very, very big way. We started also importing quite a lot of vehicles.

In fact, the biggest volumes of vehicles we sell in the country are imported brands. I mean, last year, for example, in, in, in 2013. 23, 77 percent of all new vehicles sold in the country were imported brands

Ciro De Siena: because there’s seven manufacturers on local soil, but there’s 42 brands trading. Yeah,

Mikel Mabasa: absolutely. So we then took a decision about just pre COVID, uh, to change the NAMSA, uh, brand.

Um, and to represent what it is now representing, which is a multiplicity of different, uh, you know, partners, not just only those who are manufacturing vehicles and also those who are importing vehicles, but also those who are having interest in what we do as a sector, because there are many companies. I mean, take for an example, APSA is a bank.

APSA is saying, Look, I make money out of selling your cars. So why don’t I get closer to NAMSA so that I can be able to better understand your thinking, your strategies and where you’re taking the industry going forward. Telecommunications companies also started knocking on our door saying, you guys are now introducing a new energy vehicles, we are putting technologies that are going to depend on our 5G network or 6G or 7G network in the future.

We want to come closer. So

Ciro De Siena: like connected cars, I see. So now the telecoms has to get involved because our cars, you know, the other day, just a quick story. Yeah. I got in a fancy BMW and it said, log into your BMW. And I was like, yo. I’ve got enough passwords in my life. Now I must log into my car. But it just shows you where the tech is going.

Mikel Mabasa: Absolutely. And we normally say, in fact, when you look at our cars today, that, you know, effectively iPads on wheels.

Ciro De Siena: Yeah. It’s really annoys me. I’m joking. The tech is amazing. Yeah, absolutely. So

Mikel Mabasa: NAMSA is really. Has evolved over time, and we’re very grateful that we have partners. And because the closer when a massive came on last year also said, Look, you cannot afford to be outside of Namsa.

So we’re very proud that because the closer is also a member of Namsa, and we obviously working very closely with all our partners to be able to take the automotive industry to greater heights. And we’re very excited. I think it’s a It’s a very sexy. Industry to work in I mean who doesn’t love cars and south africans love their cars and we certainly want to Work with like minded partners to be able to take this industry to get greater heights,

Ciro De Siena: you know in the in the 11 years I’ve been doing this building the company and the youtube channel, etc.

I’ve come to realize that cars is a language Yeah, you can go anywhere in the world and people speak car. Yeah, and I think that namsa speaks car We speak we are constantly in conversation with our consumers Absa speaks car we all In this for the love of it and for mobility and to help South Africans to build this country.

I mean, cars are woven into the fabrics of society. I don’t think anything would ever get done without trucks, buses, cars, and uh, it’s exciting industry to work in. And what I’m so excited about is, is the sort of triangle we’ve got going now is, is ABSA, CASA, COSA, NAMSA, and the consumer awards is what’s bringing us all together.

And we’ll go into the consumer awards. We’re delighted that you will be from what I understand officially endorsing our awards program as the only NAMSA endorsed awards program.

Mikel Mabasa: Absolutely. And we are very excited about that because we took a decision a while back that NAMSA will no longer endorse. Um, you know, uh, awards, um, events and activities and so on.

Um, but when we connected obviously with cars that cause, uh, uh, it was a no brainer. I think we wanted to amongst other things. And I think for us, this award represents a number of things that should be going right in the country. I mean, if you look at South Africa today, a lot of people are talking about a very, very subdued sentiment, uh, you know, that is, uh, going around the economy is not where it’s supposed to be.

Our view is very, very strong to say that in order for us to be able to lift the current mood in the market, we, as business leaders and organizations, we can play a absolutely progressive role to be able to turn. Uh, you know, the negative sentiment in the market into positivity. If you look at some of our numbers, for example, from an answer point of view, in the last three years, we’ve seen a south, you know, trajectory in terms of new vehicle sales.

And we are now associating ourselves with products, with brands and also with partners that can be able to help us to bring this mood up because that’s what South Africa needs. I think South Africans Exhausted about hearing negativity and I think cars can really play a very, very important role in lifting that mood up.

Ciro De Siena: You know, I was in, I was very lucky to have a tour of Karicha, the VW plant. And I don’t think anyone can walk around that plant and not have hope for this country. Absolutely. I mean, What a phenomenal operation. One polo every 1. 6 minutes, 700 a day, 3, 000 people employed. Massive, massive investments in renewable energy, uh, which, which is, is the result of a difficult story, load shedding.

But, we’re going to be leading the world in renewables. And, and ultimately, even though maybe there’s been a little bit of a south trend and maybe the market’s in, in a little bit of a dip.

Mikel Mabasa: Yeah.

Ciro De Siena: But the automotive sector in South Africa is an extremely positive story.

Mikel Mabasa: Resilient, um, you know, sector, uh, by, uh, all accounts.

I mean, you, you, you, you’ve given the, I mean, the VW example, you go to Toyota for an example in, in, in prospecting in Deben, a company that. That went through massive floods that destroyed destroyed

Ciro De Siena: images on I mean, it’s shocking. That’s what happened.

Mikel Mabasa: Absolutely. And for them to be able to take a decision to stay in this country, yes, after those devastating floods,

Ciro De Siena: yes,

Mikel Mabasa: it’s really an amazing story.

Ciro De Siena: Yeah. And I mean, the numbers, you know, Like building cars is not a cheap exercise to tool up. I mean, billions coming into the country and it shows confidence in our market and our economy. And I mean, I think the figure is that in the automotive sector, in the supply chain, we’re looking at 157 automotive suppliers with 120 employees.

10, 000 people employed. Is that correct?

Mikel Mabasa: Absolutely. And, and, and look, I think the beautiful thing that you see in the South African auto making story is that we no longer competing a BMW in Roslyn is no longer competing with a Mercedes Benz in East London. A BMW in Roslyn is now competing with another BMW in Germany, another BMW in Mexico, another BMW in Thailand or in China.

Um,

Mikel Mabasa: and, and, and we’ve got to remain absolutely globally competitive. Um, and the fact that in the last, if you look at, for an example, the investment announcements that many of these seven companies have Made in the last seven years, it really reaffirms their commitment to South Africa, because if you look at a number of them as well, they’ve got also a very rich history.

BMW in Roslyn was the second, in fact, was the first country where BMW set up shop outside of Germany. Wow, there’s not any other country they went to other than South Africa for the longest time. They’ve just celebrated their 50 years in the country and they’ve also announced a massive investment, um, you know, to produce an X3, a plug in hybrid in the next year or so.

So we are very excited that there’s huge investments that are coming through.

Ciro De Siena: And we must chat about new energy vehicles because that’s a fascinating aspect of the industry that’s developing really fast. But you know, we actually just partnered with BMW. We formed. I think it was 26 classic BMWs for their 50 year celebration just to make sure 26 classic BMWs are working clean, you know, and we did everything in a week with fuel inside, you know, and, uh, I mean, BMW has a really cool history.

I mean, in South Africa, as you know, I mean, the Gushesh, right? An icon. I think if I’m not mistaken, when we built, uh, Was it 325is or was it another car? I think it was the M535i. I don’t think they actually told Germany what they were doing. I think they put the M1 engine in one of the road cars and they were like, Oh, let’s ask for forgiveness rather than permission.

So I mean, BMW Roslin has created some of the best BMWs on earth and it’s, and, and the rarest and the most valuable. And so that, uh, Casa Cosa is really lucky to earn two of them. It’s 2325is. It’s part of our display in our new Casa Cosa office. But. The history of South African engineering and the current, um, prowess that we have is, is world famous.

Absolutely.

Mikel Mabasa: Absolutely. Look, I think BMW is an amazing story to tell in South Africa. You go to all other brands, similar story. I mean, look at Mercedes Benz for an example. Mercedes Benz was the first brand that actually came into this country in 1876. 1876? 1876. And that vehicle called the Benz Velo. So when people came into South Africa, when you go to Mercedes Benz plant in London, it’s actually on the entrance as you walk into the main building, it’s still there.

And we’re trying to convince them to bring it this year to the South African auto week. And I’m hoping that they will to squeeze their arm because we’re celebrating our centenary as a country this year. Now, I want to go back to the 1876 story. So when Mercedes Benz came into the country. A lot of historians that you speak to that followed the automotive industry and its history.

They remind us that that car came into the country a year later. It actually caught fire. It burned down completely. Oh,

Ciro De Siena: that’s painful.

Mikel Mabasa: But it is that fire. That sparked the passion that you see for automotive industry in South Africa because since then you know people then were fixated about that fire and Uh, they wanted to know what happened.

Why did it bend down and so on and that really was the spark

Ciro De Siena: That’s like phoenix rising from there. Yeah,

Mikel Mabasa: and and then from there the rest is history

Ciro De Siena: so Seven seven brands building locally. Yeah, 42 brands trading. Yeah You From what I understand and from the conversations we’ve had, NAMSA, once a quarter, gets all these people in a room together.

So I have to ask, Is it like a tribal council where you vote someone out at the end of the day?

Mikel Mabasa: Yeah, well, that’s a very interesting question to ask because you’ve got 42 CEOs who get together. That’s amazing. Yeah.

Ciro De Siena: And this is what NAMSA does. This is what you guys do. You, you send out the meeting invite and everyone comes into the room together.

That’s incredible.

Mikel Mabasa: Absolutely. And, and I think we’re very fortunate that we’re also able, unless someone is traveling outside the country, We are also able to get them to actually physically come and attend these meetings themselves because it’s a commitment that they’ve made that collectively the South African industry and particularly the automotive industry can only survive, uh, purely based on the commitment and the contribution that they want to make collectively.

And I think over the last couple of years, we’ve seen an amazing growth. amongst them. Because remember, these are competing partners.

Yes.

Mikel Mabasa: These are people who are fighting for market share in the market. But when they get to the NAMSA table, I mean, we’ve got the longest table in South Africa where we can be able to accommodate all this.

Like

Ciro De Siena: you mean physically it’s the longest table. Yeah,

Mikel Mabasa: absolutely. Wow. And where does that

Ciro De Siena: happen?

Mikel Mabasa: In our office. Where is that? In Linwood, in Pretoria. Okay. But what we’ve done in the past, Since last year, post COVID, we’ve, we’ve also introduced a new way of doing things so that we can be able to rotate our meetings, uh, amongst them.

So last year, for an example, our Q2 meeting was held at Ford Motor Company in Silverton. Our Q3 meeting was held in Kiriega at VW. And then the last one, uh, end of the year was in East London, uh, at Mercedes Benz.

Ciro De Siena: I mean, what a feat just to, just to make that happen. And, and what, what sort of things come out of those?

Those conferences, those, those quarterly meetings.

Mikel Mabasa: Well, look, I think what we’ve done very successfully was to identify what brings them together. Obviously, South Africa has competition laws, which all of us must observe and respect. Um, so everything that sits on that table, Can not be competition related.

So issues around pricing, marketing and those issues obviously off the table completely because it’s a competitive space. But when you look at, for example, issues around regulation, Issues around policy issues around data. You know, we collaborate on all those key areas. South Africa. Obviously, it’s a very huge.

We are the 22nd biggest market that produces vehicles globally. Um, and we’ve got a lot of, um, regulations and new policies that we want the South African government to consider. And in order for us to be able to support government in considering those policies, we need to also put our views on the table.

Ciro De Siena: Yeah. So you present a unified force to government. Yeah. Yeah.

Mikel Mabasa: Because imagine a world where Each of the 42 went to government.

Ciro De Siena: Yeah. Oh, no, no, they won’t answer your phone calls. Absolutely. They will answer your phone call

Mikel Mabasa: Yeah, but if I’m able to do so with that collect collective mass. Yes behind you exactly.

No, I mean, that’s

Ciro De Siena: that’s incredible I think you you’re essentially spearheading Uh, what is a very powerful group of voices. Absolutely. And tell me about yourself. How did you come to be the CEO of NAMSA? What, what is your, your origin story, as they say in the movies? It’s

Mikel Mabasa: actually a very interesting one, uh, because, um, I’m actually a transport economist by training.

Okay. Uh, but my, my background is not in automotive. So I never did automotive in my studies. I actually majored and did a lot of work in the aviation space. Okay. Um, so I’m a, I’m a, I’m an aviator in my own right. In fact, in my previous life, um, you know, when I was 26 years old, I was appointed as the first black chairman of ATNS.

ATNS is the air traffic navigation service, which manages our airspace in the country. Um, and I served in that role for about eight years, um, uh, to, to obviously try and, and manage, uh, our airspace, obviously at NSO operates in about 26 airports around the country. Johannesburg, Cape Town, uh, and, and, and a few others that are in, in the, in the country.

And then when I left at NSI, uh, was then appointed as the chairman of, uh, the S Services Licensing Council, uh, which is a council that. Offers and issues licenses. So if you are an airline, for example, you want to open a new route between Uppington and Bloomfontein, you come to the council and the council looks at your business case and we are able to then say, Yes, you’ve got a solid business case that can help us to to open that.

And then, uh, After that council, then I went to the International Licensing Council, which is also, which was also focusing specifically on international airlines that are flying into South Africa and also flying out of the country. Because if Emirates, for an example, wants to fly into the country, they need to apply for a license.

And then we look at, for an example, the frequency. Uh, of those routes. How often are they in the country? Which airports are they landing at? Uh, which times of the day they’re landing at? And so on and so forth. So all those things, um, uh, responsibilities within, within the AT& T space. So, um, and then I moved out of, um, aviation, you know, partly I went into the mining industry.

So when I, when I came to NAMSA, I was actually with, uh, Kumba. Uh, in the mining sector, um, and did a lot of work there, particularly in terms of, uh, supporting, uh, the new strategy that Kumba had, uh, in terms of their corporate social investment investments that they were making in different communities. So I went to Tabazimbi, uh, and spent some, some, some very good time there to, to be able to do some work, uh, with the local communities there.

Ciro De Siena: And, and that’s amazing. And how long have you been with NAMSA now?

Mikel Mabasa: Five years now. Five good years. I think, yeah, yeah. It’s been, it’s been a ride. It’s been a ride.

Ciro De Siena: So, I’ll, I’ll give you a quick bit of background on Cosa, Cosa’s origin story. So, it was started, the two founders are about my age, they’re about, around 40.

Yep. They started it, uh, In their mom’s house because they wanted to go surfing more. They were tired of working for a boss. So they worked through the night, built the website somehow. I mean, you know, it’s chicken and egg, right? If you got no cars on the site, no one’s going to come to the site, but if no one comes to the site, no one wants to put cars on your side.

Yeah. Goodness knows how they got that right, but they did it. And here we are 15 years later, I joined in year four. There were 12 of us. Now there’s 80 of us. We decided, uh, my colleague, Hannes Oerstesen, who I refer to as the Oracle, he was the youngest editor of car magazine ever, uh, amazing car journalist and, and just a petrol head of note.

And he’s. And he’s like, we need a proper awards program here in this country. So the very first one, we bankrolled it. Uh, we held it, uh, in Bramfontein. It was quite small. It was about 150 people. I actually emceed it with John Flismus. Maybe we can put a picture of that on the screen. I had way more hair. I don’t actually like looking back at those pictures.

And, um, And we, we ran it, it grew to a 500, 600 person ceremony at Kyalami, uh, 13 categories, naming the 13 best cars in the country across the budget spectrum. And then the highly sought after brand of the year and, and where we, where we differentiated ourselves immensely was 50 percent of the judging process was our handpicked judges testing cars over two days at Gerotech, which is what has been on the screen behind us.

But 50 percent was giving the consumer a voice. And we spent a lot of money and time with Lightstone surveying people who had cars that were five year old or younger who had been franchised at a service dealer. And it was an intense questionnaire. It was 50 questions and it was reliability, what’s your experience been of aftermarket service, and 50%, and that counted 50 percent towards the car.

So we really gave consumers a voice. Brand of the year was 100 percent consumer data Driven and it became and for instance Suzuki won two years in a row when Suzuki won They were selling three to four hundred cars a year. Yeah. Now, where’s Suzuki four and a half thousand? So that mean that was our fault obviously Toyota’s obviously on a few times VW.

So we now come into Um, the 7th, oh gosh, is it the 7th? I should probably know that. We’ll cut that part out. It’s, we’ve had a lot of cars awards. And we’re now very grateful that it’s sponsored by, by ABSA and now endorsed by NAMSA. And, um, we think that this is just such a wonderful partnership between the three of us.

You know, we’ve got, we’re in conversation with the motor and consumer. Um, we are the largest independently owned company Website in South Africa, 75, 000 cars on the site, um, 3 million app downloads, 50 million page views a month. I mean, we are, we are, I’m proud of what we built, you know, and, uh, and, and I think we always wanted the most important awards program in the country.

And now with NAMSA’s endorsement, I think that is undisputable.

Mikel Mabasa: Absolutely. So look, I think the story you’re telling, um, also validates our decision to partner with you. Um, you know, in this particular ones, because it is, it is our considered view that the manner in which a consumer. Interacts with our vehicle is changing and it’s going to change faster, you know in the next couple of years.

I mean Um, we also know that uh, you know the traditional way of buying a car through a bricks and mortar Uh in a dealer, uh, you know that future is changing very very quickly When a person walks into a dealer already, they’ve done 80 percent of the research. Yeah. Well, they watch of it.

Ciro De Siena: They watch my videos Absolutely.

Absolutely. No, are you 100 percent correct? I think a lot of people walk in Knowing exactly what they want or they at least know the exact questions to ask. Absolutely. Yeah. Yeah. Yeah, and and talking about you know mobility changing a fascinating Development and it will I mean this is the way the world is going new energy vehicles.

Yeah, and I think NAMSA and, and, and you can, you obviously tell me the deeper story, but we, for the first time have a fully electric category in the cars awards, um, the aura, the BMW IX one and the Volvo on the category. But we also have the BMW IX fully electric competing in premium cars against traditionally powered cars and the premium crossover.

So very exciting and really cool to see ICE fighting with EV, but now it’s. I think I’m not sure many people know but there’s an extra tax on EVs in this country. Yeah, and if we the manufacturing sector Really has to start pivoting because if, if we don’t build EVs here, we’re going to have nothing to export to those, to those EV dominated markets.

So how has NAMSA been involved in all of this and conversing with government and the manufacturers and trying to sort of. help model and structure and guide this, this new energy vehicle transformation.

Mikel Mabasa: Well, look, it’s been a very, um, rough ride. I must say, you know, particularly in the last couple of years, uh, because South Africa has been absolutely pedestrian in relation to finalizing its own policy.

We are obviously excited that the minister of trade industry and competition announced a white paper on the 4th of December last year, which is the government policy around how the. are going to posture in relation to, um, you know, new energy vehicles. Our definition is not electric vehicle. Our definition is new energy vehicles because electric vehicle is one drive train out of many.

Ciro De Siena: Yeah.

Mikel Mabasa: And hybrids, hybrids, plug in hybrids, traditional, a few, you know, fuel cells and so on and so forth. So, OEMs globally are also innovating. They’re bringing, uh, you know, newer technologies into the market. And I think it has been a very, very tough period for us in the country to have a conversation with government in order for them to be able to at least give us something that we can be able to work with in relation to how the new energy vehicle in South Africa is going to be.

Two to germinate. We’re obviously very pleased. I mean, we listened very carefully yesterday from, you know, the Minister of Finance, where he announced already that government is going to be supporting the production of new energy vehicles. But the first phase government is looking at is concentrating mainly on electric vehicles.

So there’s, um, you know, 968 million, uh, that government has already set aside to be able to support manufacturers that would like to begin with the production, which is great news for us. Uh, because we’d like to see more companies coming into South Africa. We we’ve mentioned earlier that we currently have about seven manufacturers, uh, that are ready.

Producing, uh, two, uh, in the process of building their plants. So we’ll have about nine OEMs in the country. Can you reveal? Absolutely. Oh, there we go. Yeah, that’s, that’s

Ciro De Siena: some interesting information. And

Mikel Mabasa: then we also have another two that is also doing their environmental studies. And due diligence. Yeah, due diligence and so on and so forth.

Those is extra two. Um, unfortunately at this time not That’s fine. Able to, but what is number and

Ciro De Siena: what is number eight and nine? Number

Mikel Mabasa: eight and nine, um, is a Chinese brand number eight called bike.

Ciro De Siena: Oh B. Yeah. BAIC.

Mikel Mabasa: Yeah. Uh, they’ve got a product already in the market. Yes. Um, Beijing. Yeah. Very successful, uh, which is doing fantastic.

They’ve got a plant already in, in Kibera, in in the , uh, industrial zone. Uh, they’re now finalizing their paint shop, so the factories up. And they’re now running tests. Wow, that’s so exciting. Yeah, they’re running tests so that they can be able to, you know, press the button for that paint shop to start rolling.

Ciro De Siena: How many people do you think they will employ now if they get to full capacity and full operations?

Mikel Mabasa: Well, look, for a normal, um, and it depends obviously on volume. Um, you know, a Toyota, for an example, employs far more people. Sure. Uh, firstly, because of they’ve got four lines that they’re running in that plant.

A bike is going to run one line, at least initially. And we hope that they’re going to be ramping up because their strategy is that they’re not producing that vehicle for the South African market. They are producing it for the African market.

Ciro De Siena: I see. So like South Africa is like a springboard into sub Saharan Africa.

Mikel Mabasa: And you know, Chinese, you know, when they start, once they ramp up and they, those volumes are beginning to make sense, uh, you know, they will run hopefully a 24 hour operation.

Ciro De Siena: But I mean, it’s. It’s foreign direct investment. It’s employment that wouldn’t have existed. Absolutely. And uh, oh, I’m, I’m excited to hear what’s number nine.

Mikel Mabasa: Number nine is Stellantis. I’m sure. Yeah. Stellantis. Stellantis. Absolutely. Which of

Ciro De Siena: their 14 brands were they going to?

Mikel Mabasa: Well, they, they’ve chosen to manufacture the Landtrek, which is their bike, uh,

Ciro De Siena: Peugeot.

Mikel Mabasa: Um, and we are very excited and, and I think they also were very tactful in the manner in which they also, um, you know, Because as soon as they did the announcement for the investment in the country, they also employed, uh, one of the most respected manufacturer.

Um, you know, I’m sure you know, Mike Whitfield, who used to be the head of Nissan, South Africa. And then he went to Egypt and then he came back to the, to the country and he decided to go into retirement. And then Stellantis said, not So fast come, we want you to come and run our business. So there’s currently with, uh, with Stellantis.

Ciro De Siena: So, so when number 10 and 11 is about to be announced, can you just drop me a little email there? I can give

Mikel Mabasa: you a hint

Ciro De Siena: that

Mikel Mabasa: they are Chinese brands. Okay. Yeah. I’m not

Ciro De Siena: entirely surprised by that, but, but that’s very cool. There we go. You heard it here first on the cars. co. za podcast. So we’re going to be up to.

Manufacturers on home soil

Mikel Mabasa: look our ambition is to actually push it to 15 Wow And we think that it’s it’s it’s achievable. Yes, because remember we’ve we’ve put together a South African automotive master plan in 2018 where we indicated in that master plan our ambition to increase our production from the current six hundred thousand level to to 1.

4 units per annum by 2035. Now, in order to get to 1. 4 million units a year, it’s a no brainer. Our current manufacturers will not be able to ramp up to those levels. So the best way to do it is to be able to, of course, allow them to grow. Uh, you know, increase their capacity, run, for an example, three shifts instead of through two shifts and but also importantly to attract a new manufacturers to come into the country and in the last four years, we now have four on the table and we are hopeful that we’ll certainly be able to get another four hopefully in the next three to four years.

Ciro De Siena: So this, this good news story just gets better. Absolutely. So just to go back to EVs. Um, So obviously we’re in a position where we do a lot of consumer education. We help people make purchasing decisions. I personally help a lot of people make purchasing decisions. And, um, so we, we’re on our side, you know, we’re helping, I think with consumer education and, and.

and helping understand this EV revolution and what it means for motorists in South Africa. But what it sounds like to me was by you guys getting a commitment from governments and a white paper, you empowered the local manufacturers to go to their respective head head offices overseas and be like, right guys, we got a commitment here.

Like this is not a good place to invest. And I think that’s extremely powerful achievement.

Mikel Mabasa: Absolutely. So And we’ve obviously are mindful of the fact that South Africa has a multiplicity of fiscal challenges. Um, and we did not want to overwhelm our fiscals by going there with a huge begging bowel for government to put their limited resources and channel them into the automotive industry.

So we said to them, look, firstly, let’s inspire investor confidence. Let’s get these brands. To commit to South Africa that they’re going to stay in the country because we want to preserve the jobs that we have in the system. We also want to increase our capacity to be able to produce these vehicles, not only the vehicle itself, but also the components that goes into these vehicles that we want those components to also be produced in the country.

So phase one for us was to secure at least that production support. Phase two is going to be how do we then stimulate demand? For these new vehicles because you and I, um, currently, uh, finding it extremely expensive, Uh, you know to get into the EV market because I

Ciro De Siena: wanted to ask you that’s where

Mikel Mabasa: yeah Absolutely.

The price points are still very very high

Ciro De Siena: and Correct me if i’m wrong, but I don’t I think I read this correctly I was quite disheartened that the government is not going to drop anytime soon the extra 7 percent tax on EVs. Is that the case?

Mikel Mabasa: Well, we’re still in conversations. Oh, good. We cannot say definitively that they’re not prepared.

I think they’re considering it.

Okay.

Mikel Mabasa: It’s taking them longer. Uh, but they are looking at it, uh, because look, it doesn’t make sense. Um, you know, every market around the world is pushing for, uh, vehicles that are, it’s the

Ciro De Siena: opposite. Absolutely. You get a rebate. Absolutely. Yeah. Yeah. You get charged extra.

Absolutely.

Mikel Mabasa: In China, uh, they’ve actually also introduced legislation where they are now saying to the population that if you want to buy an internal combustion engine, you must now apply.

Ciro De Siena: Yes, like Singapore as well.

Mikel Mabasa: Absolutely. So, and they’re now pushing everyone who’s buying new vehicles to go for new energy vehicles in South Africa is the opposite.

Yes. We’re actually punishing people for, for, for, for buying electric.

Ciro De Siena: I mean, look, a government that is. Maybe struggling to make ends meet is probably not that keen to drop a tax. Yeah So I think you got your work cut out for you, but I mean Surely the benefits to dropping that tax outweigh what they would have earned from that seven percent.

Mikel Mabasa: You know, what is interesting? In fact, we actually did some work the last three four years which actually shows that If they drop that particular tax Um, it will not necessarily have an impact. It’s actually text neutral because you are able to remember you, you, you’re now increasing, um, you’re reducing the burden on text, uh, and that will obviously increase demand because 7 percent is a big number.

You know, we’ve got, for an example, we had a discussion, uh, about, uh, you know, just before COVID, uh, with a team from Tesla, uh, Elon Musk people, uh, who were also considering to come and bring Tesla into South

Ciro De Siena: Africa.

Mikel Mabasa: Their biggest, um, you know, issue was the import duty. And they said, without any equivocation, we’re not coming to South

Ciro De Siena: Africa

Mikel Mabasa: until you guys drop your number.

Ciro De Siena: Because, correct me if I’m wrong, but that 7 percent has a multiplier effect. Cause it’s levied on the landed cost of the vehicle. Then VAT gets added. And the other, the 18 percent gets added on that, I think. So, so actually it’s seven times something times something. Absolutely. And that’s why EVs are so expensive in this country.

Mikel Mabasa: Absolutely. And if you, if you take one step back, I mean, South Africa, our tax base continues to be very, very high. Because even on your current, uh, you know, internal combustion engines, a lot of people don’t know that if you buy a brand new ICE vehicle, Of your retail price goes into government

Ciro De Siena: on an ice vehicle on an ice

Mikel Mabasa: 42 percent 42 percent If you’re buying a car with 200 000 yes in this country, yeah 84 000 of that goes to government goes to government.

Ciro De Siena: Yeah, and and then on evie, it’s obviously worse. It’s even worse So what? North of 50 percent of an EV’s cost in South Africa is a tax. Absolutely. Wow. Absolutely.

Mikel Mabasa: And I think those are some of the things that we need to be able to quickly speak about and reform. We, we, we believe very strongly that if you look at our tech space, there are a lot of things that, um, have not been, Amended for the longest time.

I mean, take for an example at velorum text. There’s a text called at velorum where government takes Yeah for an example for what they call luxury goods. Yes, you know your your rolex one Yes, and and cars unfortunately have also been reinfenced under that particular As a luxury good. Yeah. Yeah.

Ciro De Siena: Okay, and

Mikel Mabasa: and we’ve argued, you know that at velorum text on its own needs to be You know reconfigured so that we can really be able to make sure that stimulate the economy.

Absolutely. Absolutely.

Ciro De Siena: So so I I heard a story. I’m so excited about this because I heard a story of why that 7 percent exists in the first place, right? Because it’s actually quite an old tax from what I understand. And I’m not going to tell you what I heard. I’m going to ask you if you know, if you’ve been able to confirm why that 7 percent exists on EVs in the first place.

Mikel Mabasa: Well, look, it’s, it’s not necessarily. Um, they’ve obviously pronounced that, you know, and I’d love to hear the story you’ve heard.

I’ll tell you. Yeah.

Mikel Mabasa: So, so, so I think our understanding is that government was obviously looking for where do they find uh for an example, additional sources of revenue in order for them to be able to increase uh government coffers and they’ve obviously looked at that as a as a as a as a disability.

They also introduced what we call export levy. What that means is that if you are Producing a vehicle in South Africa, uh, and you Using that car as an export so you’re not selling it in the country. It goes out of the country Government also charges you a levy For having produced that car in south africa and taking it out.

Ciro De Siena: Oh, wow It’s like thanks for doing all the work exactly as another levy

Mikel Mabasa: and guess what? South africa is the only country in the world that actually imposes an export levy.

Wow

Mikel Mabasa: So and and we had you know massive conversations with government to say but this is double text because remember yes You Those vehicles, the destination country or the receiving country also imposes an import duty on those vehicles.

So we’re paying twice. We’re paying to take it out and then, and then paying again for, uh, for, for getting it in, uh, you know, into the other country where it is going. So we’ve, we’ve argued quite very firmly to say that, um, you know, this is double taxation. We need to be able to do that. And I think government has considered that we’re waiting now for the minister to make a decision.

Gosh.

Ciro De Siena: Can you imagine how little progress would be made if NAMSA didn’t exist? If you guys weren’t having these conversations with with the voices of the automotive sector behind you I mean, I don’t think we wouldn’t get anywhere.

Mikel Mabasa: Absolutely. And and that’s why we we we, you know, very progressively identify areas that we believe You can be able to work together on and then go to government and say we we cannot afford to to have this We want it differently.

Ciro De Siena: So let me let me tell you the seven percent the seven percent, right? So this came from somebody at a big You British manufacturer. Yeah. That narrows it down a little bit, but it was off the record. And I’ve never been able to confirm it in writing. I can’t find anything on the internet. I feel like I’m quite good at Google.

Can’t find it. But this is what I was told. When the 7 percent tax was added to electric vehicles, the only electric vehicles being imported into South Africa were golf carts. And the 7 percent was applied as an extra luxury tax to what was viewed as an extremely unnecessary luxury item.

And

Ciro De Siena: this 7 percent is a hangover.

Yeah.

Ciro De Siena: From golf carts. That’s what I was told.

Mikel Mabasa: I’ll join you in the Google search.

Ciro De Siena: You can confirm that for us. If you can get one of the manufacturers or someone from government to confirm that, that story would go viral. Absolutely. The EV tax is because of golf carts. But that’s what I was told off the record.

And look, I’m going on the record now because well, That person’s emigrated and he probably won’t shout at me for telling you. But you know, it’s, it’s, it’s one of those stories where, I mean, it almost sounds too crazy to be true, but let’s, I’ll work together with you. Let’s uncover this one because it’s fascinating.

But, uh, but Michael, I, you know, I feel like we could talk all day. I mean, I’m like, I should, maybe we should get some Uber eats or something and get some, get some fuel. But I think, you know, we, we are delighted with what’s happened here. I think, uh, it, it seems that our new MD, Amasi, is also quite a persuasive guy, so that’s good for us, it’s good for business, you know, we sent, sent him in, parachuted him in, to, uh, to start this relationship, and we are extremely excited about the COZA, COZA Consumer Awards coming back, now sponsored by ABSA, I think the industry is excited.

And we are over the moon to have Namsa and yourself and your team on board.

Mikel Mabasa: Well, look, the only thing that Amasi was not able to convince us on. Was for us to change the NAMSA logo colors Because you know, you’ve got ABSA Yeah, you’ve got ABSA and Caz. coza in red and then you’ve got NAMSA in green and black He’s sitting there

Ciro De Siena: having a big laugh.

Yeah, he likes it a little cheeky But uh, but Michael what a pleasure I um, i’ve thoroughly enjoyed this Um, thank you for your time and i’m sure You’ll be back And I hope that this is the beginning of a long, valuable, fruitful relationship between our three businesses.

Mikel Mabasa: Absolutely. Look, we are very excited about, um, you know, the journey that we’re about to take.

Um, and we normally say we, we invest in relationships, um, and we, we are. convinced that this is a relationship that we want to not just spend our energies on, uh, we believe very strongly that there are benefits that would accrue, um, you know, long time, long term. Music to my ears. Yeah, absolutely.

Ciro De Siena: It makes me very happy and very proud.

So thank you. Thank you for your time. Thank you.

Mikel Mabasa: Thank you for having me. I’ve

Ciro De Siena: had a lot of fun. I’ve learned a lot. And I can’t wait for this video to get out there for the for us to formally make the announcement It’s a it’s a really it’s a good story. Fantastic. We’re very happy. So, thank you, sir. Thank you Enjoy the rest of your day.

You too. And please come to cape town because we’ve got our own podcast studio now Soundproofed everything lights up We have our

Mikel Mabasa: own coffee bar. In fact, we, we in Cape town, uh, during the second week of March, uh, for the wealth economic forum, so we’ll probably, I will send you a formal

Ciro De Siena: invite and, uh, we’d love to host you.

I can’t wait for you to see the new Cape town office. So thank you very much for watching and, or listening to the special, uh, Cosa Cosa podcast, Michael Mabasa, CEO of NAMSA, the. Automotive Business Council. Check out NAMSA online. It’s just N A M S A. If you Google them, you’ll find everything. Kaza Kaza Consumer Awards is back.

All the information’s on our website. A link will pop up somewhere above my head right now, or in the description below. Follow us on all the socials on the YouTube channel. Follow NAMSA on all the socials for all the latest announcements. ABSA as well. The Kaza Awards. Is happening very, very, very soon and we are extremely excited about it.

So thank you. I’m sure the CNN has been an absolute pleasure. And, uh, yeah, I think let’s go get some breakfast. I’m I’m actually, I missed breakfast. Yeah, let’s go.

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On to your next one. Right, thanks very much for watching the video. Okay, I think I’m done. Yeah, I’m finished now.

Source: https://youtu.be/sVQbPapHsG8