The vehicle manufacturing industry in South Africa is relatively small, contributing around 0.9% to our GDP. Yet the automotive industry receives substantial preferential tax treatment, costing the fiscus almost R35bn in foregone tax in 2022 (around 0.5% of GDP). To get a back-of-the-envelope sense of the extent of the support the industry receives, one can compare the foregone customs duties to the number of employees in the industry. The motor industry directly employs around 35 000 employees with a further 60 000 employees or so in manufacture of bodies and parts and accessories, implying a per job implied cost of around R350 000 for foregone tax alone. Direct support to the automotive industry has exceeded R20 billion between 2011 and October 2024, with Department of Trade, Industry and Competition Automotive Production and Development Programme incentives amounting to approximately R2.5 billion in 2023/24.
As we showed in an earlier post, some Industrial Development Corporation (IDC) programmes have an estimated cost per estimated job of over R1 million.
