Expansion of BRICS+ could bolster SA auto industry – report
THE AUTOMOTIVE Business Council’s BRICS+ Research Report 2024 has found that South Africa has not substantially benefited from its membership of the bloc, but this could change should membership be expanded. A statement released late last week by the council – Naamsa – noted that China and Russia want further BRICS expansion this year to “make the group financially stronger and take on the US and other Western allies”.
An additional 30 new countries have asked to join the bloc soon, including Thailand, Malaysia, Indonesia, Algeria and Nigeria.
Consulting firm BCG states on its website that the BRICS+ nations account for one-quarter of global GDP, 40% of global trade in goods and nearly half of the world’s population. “Adding another dozen nations that have applied for membership, including dynamic emerging markets such as Thailand, Vietnam and Bangladesh, would raise the group’s share to one-third of global GDP.”
Naamsa said some of the prospective new members were “significant automotive countries from a South African automotive industry perspective”. It noted, however, that it remained to be seen what benefits an expanded bloc would bring to South Africa amid the “shifting global power dynamics between North and South and East and West”.
Advantages could include improved access to finance, as well as collaboration across the member countries in developing infrastructure and industrialisation, it said. “Ultimately, the socio-economic benefits of job creation, economic growth and skills development can contribute to the overall prosperity of member countries,” it said.
South Africa joined the then BRIC bloc in 2010, which resulted in an immediate uptick in imports from Brazil, Russia, India and China between 2010 and 2011. Imports from the four countries continued to gain over the period researched (2010 to 2023) “by significant margins”. South Africa imports most of its vehicles from India, followed by China, which also became South Africa’s top source for aftermarket parts in 2018.
In 2023, apart from Russia recording low trade values, the automotive trade balance remained heavily skewed in favour of India, with an import to export value ratio of 97.7 to 1, with China at 56.8 to 1 and with Brazil 2.6 to 1.
According to the World Bank, South Africa’s exports of goods and services as a percentage of GDP is 31.19%, while imports of goods and services in terms of the same measure is 25.02%.
The automotive trade analysis found that export performance to the BRICS countries was “indifferent”. The bloc was expanded to include Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates during last year’s 15th BRICS Johannesburg Summit.
Some reasons for the lacklustre exports can “be attributed to broader market and economic conditions, automotive policy factors, tariff measures as well as relevant country profiles not suited to the specific premium passenger car models and bakkies manufactured in South Africa”, the statement said.