Financial services group Nomura believes BMW's scrapping of expanded investment in South Africa shows it has had enough of labor issues.
"We hear of these things all the time from companies, but they normally are not in the public eye and in the media because they are decisions made in quiet back rooms by management and not trumpeted," Nomura analyst Peter Attard Montalto said Friday.
"However, BMW has clearly had enough of the labour situation and the risk/reward of further investment simply doesn't make sense for them."
French news agency Agence-France Presse reported on Thursday that the German Car maker, South African division had lost an opportunity to compete for production of a new model because of ongoing strikes.
"The ongoing strike action affects the reputation of South Africa to be a reliable partner for export," local BMW spokesman Guy Kilfoil was quoted as saying.
Production had been slashed from 350 to 85 units a day he reportedly said.
A strike in the automotive industry by National Union of Metalworkers of SA (NUMSA) members has entered its fourth week.
NUMSA spokesman Castro Ngobese said workers wanted a double digit wage increase and changes to conditions of employment, such as the banning of labour brokers, establishment of a short-time workers' fund, and a transport allowance.
He said the strike would continue until a deal was agreed on.
On Friday, the Business Day newspaper featured an editorial on BMW and criticised President jacob Zuma's economic policy approach.
"The president is a politician. BMW is a manufacturer. Only one of them knows what they are talking about," the editorial read.
Attard Montalto said investors were keeping a close eye on the country, not only in the car sector but with Eskom's delayed construction of power stations and labour struggles in the platinum and gold sectors too.
"There are many other companies thinking the same thing because of labour issues," he said.––Paul Duchene