It’s WICKD: The auto manufacturing investment SA doesn’t need

The recent surge in interest around the concept of "WICKD" – a term used to describe a type of auto manufacturing that threatens the stability of South Africa's existing industrial base – has sparked intense debate among industry stakeholders, policymakers, and economists. At its core, the issue revolves around the potential shift from Completely Knocked Down (CKD) manufacturing to a newer model known as Wholly Imported Completely Knocked Down (WI-CKD). While CKD manufacturing has historically played a pivotal role in driving local job creation, building robust supply chains, and fostering technological advancement, WI-CKD appears to offer foreign automakers a less demanding path to market entry, potentially undermining the very foundations of South Africa's automotive sector.

The controversy emerged following reports that some foreign automakers, primarily from Asia, are increasingly opting for WI-CKD over traditional CKD models. Unlike CKD, where nearly all vehicle components are produced domestically, WI-CKD involves importing almost all parts from the manufacturer's home country, with minimal local involvement. This model, critics argue, results in negligible contribution to local employment and economic growth, despite appearing similar to CKD on the surface. Industry leaders, including representatives from the six major Original Equipment Manufacturers (OEMs) such as BMW, Ford, Isuzu Motors SA, Mercedes-Benz, Toyota, and Volkswagen Group Africa, have expressed alarm over this trend, fearing that it could lead to a decline in local content and weaken the already fragile ecosystem of component suppliers that support the sector.

The implications of this shift are profound. CKD manufacturing has long been a cornerstone of South Africa's automotive industry, generating substantial value through local sourcing and production. With approximately 40% local content in locally assembled vehicles, the sector supports around 500,000 indirect jobs and contributes significantly to the nation's GDP. Moreover, the presence of local component manufacturers has enabled the development of a sophisticated supply chain that extends beyond just the automotive industry, influencing sectors such as logistics, retail, and services. However, the introduction of WI-CKD poses a direct challenge to this system, as it bypasses the need for extensive local input, thereby reducing the economic benefits that flow from CKD operations.

Policymakers, too, face mounting pressure to reassess the regulatory environment that has allowed WI-CKD to gain traction. Critics suggest that current policies, particularly those related to market entry and investment incentives, have unintentionally favored foreign automakers seeking to enter the South African market with minimal infrastructure and local engagement. This has led to a situation where the country's strategic goal of promoting localized industrialization is being undermined by a growing preference for foreign-led manufacturing models that prioritize cost efficiency over long-term economic development.

Industry experts warn that unless there is a concerted effort to revise these policies, the transition to WI-CKD could result in a loss of thousands of jobs and a weakening of the local supply chain. They emphasize that the success of CKD manufacturing lies not only in the physical act of assembling vehicles but also in the broader economic and social benefits it generates, including technology transfer, skill development, and sustained employment opportunities. As the debate continues, the question remains whether South Africa can maintain its position as a competitive player in the global automotive industry without compromising the principles of local industrialization that have defined its past successes.