The South African Automotive Master Plan 2035 (SAAMP), introduced in July this year, aims to increase transformation and localisation in the automotive industry, which is also evident through the launch of the Automotive Industry Transformation Fund (AITF) in 2019. The fund has, to date, set aside R6-billion to support black participation in the industry.

As an investment company with R900-million to invest, Agile Capital is also seeking opportunities to invest in local automotive component businesses to support the localisation efforts, states Agile Capital associate Asavela Lumkwana.

“We view the automotive component industry as an important industry in the local market. It is the leading exporter in the Eastern Cape, adding to jobs and development in a province where economic activity is needed. It also contributes significantly to the overall gross domestic product (GDP) of the country, mainly driven by large quantities that get exported through components or fully assembled vehicles.”

She emphasises that Agile Capital has previous investment experience in the local automotive industry, with investment in automotive companies Autozone and Autovest, and successful exits from these businesses.

In addition to the opportunities provided by SAAMP and AITF, the signing of the African Continental Free Trade Agreement (AfCFTA) in January this year creates more lucrative export opportunities into other African countries.

Further, discussion at COP26, hosted in Glasgow last month, regarding lower-emission vehicles, presents new innovation opportunities, such as demand for components that align the local industry with global trends.

“Last year, the GDP contribution of the automotive sector was 4.9%, a decline from the previous year, owing to Covid-19. We estimate a recovery of this contribution, especially when taking into account the SAAMP, AITF, AfCFTA and lower-emission vehicle trends. “Based on this recovery, we expect that the overall growth in the automotive industry will also grow the automotive component industry.”