If the UK leaves the EU without a deal on the one hand, and fails to conclude a trade arrangement with Sacu on the other, SA may face tariff increases on 70 automotive product lines, according to the commodity codes published by the UK. Out of these 70 tariff lines, four accounted for 84%-86% of exports over the 2016/2017 period. In 2018 the same four tariff lines accounted for 99.8% of R6.6bn in SA vehicle exports to the UK.
These four tariff lines include various petrol and diesel engine vehicles, which not only affect major original equipment manufacture exporters in SA, but also a host of component manufacturers that support the production and export of these vehicles. Stability is key in the short term, but all may not be doom and gloom in the longer run. In the event that this situation plays out, it may present an opportunity for reinvestment into SA’s component manufacturing industry, especially for multinational companies that seek to replace content currently sourced in the UK with SA content to optimise the agreement with the EU.
Meanwhile, some urgent measures will be necessary to cushion the industry from the short-term shock that a cliff-edge “no-deal” Brexit presents, as this could have potentially negative implications for the domestic automotive industry’s development path as aligned to the SA Automotive Masterplan 2035, with repercussions on jobs and GDP.
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