How China's Automotive Ambitions are Reshaping South Africa

How Chinese ambition is rewriting the rules of South Africa’s motor industry — and what it means for the legacy giants.

There is a moment, just before the sun dips behind the Magaliesberg, when the sprawling Nissan plant in Rosslyn used to look eternal. For 60 years, it was a monument to South African industry, churning out the bakkies that built the nation: the 1400 Champ, the Hardbody, the Navara.

But steel rusts, and empires crumble.

By mid-2026, the keys to this 60-year-old fortress will be handed to Chery, the Chinese giant that arrived in South Africa only five years ago but is already stealing the crown from Volkswagen.

Nissan's Rosslyn plant - now becoming a Chery operation

Up the coast in East London, Mercedes-Benz is quietly negotiating to let Great Wall Motor (GWM) move into its lounge. Meanwhile, in Gqeberha, Foton is happily assembling bakkies inside BAIC’s factory.

The Chinese are no longer just selling cars here. They are moving in.

For the first time since the fall of apartheid, the dominance of South Africa’s ‘legacy five’—Toyota, Volkswagen, Ford, BMW, and Mercedes-Benz—is facing an existential threat. Not from each other, but from a wave of manufacturing that is cheaper, faster, and backed by the full weight of the state.

To understand the shift, forget the sales charts for a moment. Look at the dirt.

For decades, the barrier to entry for foreign brands was capital. Building a factory in South Africa costs billions. But the Chinese have realized a cheat code: you do not build a factory. You buy a distressed one.

The Chery-Nissan deal is the most aggressive example. Nissan, struggling globally, pulled the plug on Rosslyn. But Chery did not want the brand; they wanted the building. They bought the stamping facilities, the paint shops and the body-on-frame expertise for what analysts suspect was a bargain price.

Why? Tariffs. Importing a car into South Africa attracts a 25% duty. Building it here—specifically achieving Completely Knocked Down (CKD) status—unlocks government incentives and avoids that penalty.

Then there is the Mercedes-GWM deal. It is a sign of desperation and pragmatism in equal measure. Mercedes spent millions modernizing the Eastern Cape plant recently, but with the US slapping tariffs on South African exports, the C-Class line is underutilized. Sharing the space with GWM—allowing the Chinese to build Tank SUVs and Haval models—keeps the lights on and the 2 400 workers employed.

Workers inside the Mercedes-Benz factory

It is a humbling reality for the three-pointed star: to survive in Africa, you might need to host the competition.

But not everyone is welcoming the newcomers.

Andrew Kirby, the CEO of Toyota South Africa, is usually a measured figure. Recently, however, his tone turned sharp. He is calling for the government to ban a specific type of assembly known as SKD (Semi-Knocked Down).

Think of SKD as the ‘screwdriver’ assembly. You import a vehicle that is almost fully built, slap on the wheels and the bumper, and call it ‘local.’ It employs very few people but still qualifies for tax breaks.

“For every job created in a light vehicle SKD facility, as many as eight jobs are lost by the corresponding CKD operations,” Kirby warned.

Volkswagen’s Martina Biene agrees. VW employs nearly 3 600 people in Kariega, pumping millions into the local economy. She is watching with alarm as brands like BAIC and Foton—who operate out of a state-owned factory in Gqeberha—ramp up SKD production of the Tunland bakkie.

The fear in Tshwane and Kariega is that South Africa will repeat the mistakes of Australia. Once a proud car-making nation, Australia dropped its tariffs and protections. The factories closed. The skills vanished. Now, they drink coffee in the converted warehouses where cars used to roll off the line.

The fight is not just on the assembly line. It is in the supply chain.

Renai Moothilal, CEO of NAACAM (the component makers’ association), is watching his members fall like flies. In the last two years, at least 12 local parts suppliers have closed, shedding over 4 000 jobs.

When Toyota or Ford builds a Hilux or a Ranger, they use local seats, local wiring harnesses and local axles. When Chery imports a car, the only local content is the air in the tyres.

“The influx of these imported, lower-price point vehicles into the South African market has had a dual effect,” Moothilal told Engineering News. “They all arrive fully built, which means… there are limited immediate opportunities for local component suppliers.”

Even giants are hurting. Goodyear recently shuttered its historic tyre plant in Gqeberha. The city, once known as the ‘Detroit of South Africa,’ is now better known for its ghost factories and rising unemployment.

If the component sector collapses, the legacy brands lose their competitive advantage. Without a local supply chain, Ford and Toyota are just importers. And they cannot beat the Chinese at that game.

So, why aren’t the legacy brands dead yet?

Drive to any taxi rank or construction site in Limpopo or KZN, and you will see the answer. The Toyota Hilux and Ford Ranger are still the kings of the dirt. South Africans are loyal to what works.

However, that loyalty is expensive. Over the past decade, the legacy brands have drifted upmarket. A fully kitted double-cab now costs upwards of a million Rand. That left a gaping hole in the market for affordable transport. The Chinese did not just walk through that door; they drove a fleet of SUVs through it.

“You have to make sure we are well represented in the new emerging market,” says Gideon Jansen van Rensburg, CEO of Motus Retail, the country’s largest dealer group. Motus is now scrambling to add Haval, Chery and Mahindra to its floors because that is where the foot traffic is going.

The legacy brands are fighting back. VW is rushing to launch the ‘Tengo,’ a small crossover based on a Brazilian platform, built in Kariega, to try and claw back entry-level buyers. Ford is betting big on the next-gen Ranger. Toyota is leaning on its reputation for resale value.

The BAIC factory in the Eastern Cape - now assembling Foton vehicles

The next five years will likely see a ‘two-speed’ South Africa.

On one side, you have the Chinese and Indian brands. They will control the volume game—the R300 000 to R500 000 segments. They will offer massive screens, leather seats and long warranties. They will be built in the old Nissan factories and shared Mercedes plants.

On the other side, you have the Legacy Five. They will become quasi-premium brands. You will buy a Toyota or a VW not just for the car, but for the network—the guarantee that the part is in stock, the resale value holds and the financing is easy.

But the middle ground—the affordable, high-volume, high-tech car—is disappearing. That ground is now Chinese.

“The goal is not indefinite protection,” Moothilal warns, “but building a sustainable, globally competitive component sector.”

If the government does not close the SKD loophole and force the new players to build real factories (with real local parts), the legacy brands might pull the plug. They will not leave because of the Chinese. They will leave because they cannot compete against a government policy that lets their rivals play by different rules.

For now, the lions are still roaring in Rosslyn and Silverton. But for the first time in a century, the people who built this industry are looking in the rearview mirror.

And all they see is a Great Wall coming up fast behind them.

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Egypt's Automotive Market Recovery Compared to South Africa

The future of South Africa’s automotive industry hangs in the balance as parliamentary leaders and global manufacturing executives call for urgent government intervention to protect the sector from aggressive international competition, while elsewhere on the continent Egypt’s market shows signs of a robust recovery.

During an oversight visit to the Eastern Cape recently, the Portfolio Committee on Trade, Industry and Competition met with industry giants including Volkswagen Group Africa and Isuzu to assess mounting challenges facing the Coega Special Economic Zone and the broader automotive precinct.

Volkswagen Group Africa chairperson and managing director Martina Biene revealed the high stakes facing the Kariega-based manufacturer, warning that decisions made now will determine whether new models are produced locally in the next decade.

“I’m now pitching for an investment in 2030, and I need that approval now,” said Biene. “If Volkswagen does not consider spending money in South Africa, then I won’t be able to launch a new car in 2030.”

The stakes are particularly high as the group weighs whether to produce its next generation of new energy vehicles in South Africa or shift that capacity to more cost-effective hubs in India.

“It’s not about protectionism,” she said. “It’s levelling the playing field in terms of cost of doing business, which is way lower in India and also lower in China for very different reasons.”

Portfolio Committee chairperson Mzwandile Masina echoed these concerns, noting that the committee identified quite a number of critical challenges during visits to the Coega SEZ and Volkswagen facilities. Masina pointed to the country’s competitive disadvantages, particularly regarding labour costs.

“We’re informed that in terms of labour cost, India, as an example, is 35% cheaper to produce a car because of their labour laws,” he said.

While reaffirming South Africa’s position as an open economy, Masina said the committee is finalising a report with far-reaching recommendations to protect the sector. “We had to tighten our labour laws due to our history. Therefore, it will be important to strike the balance between our labour laws and ensuring we can have affordable production here in South Africa.”

Beyond policy, both government and industry flagged serious concerns about infrastructure and service delivery. Biene provided a stark look at the logistical reality, explaining the company has been forced to abandon rail for road transport.

“Currently, for the domestic market business, we’ll truck all of our cars,” Biene said. “We’ll have in the domestic market probably 50 000 to 60 000 sales. The majority of that is sold in Gauteng province, so it all gets trucked from here to Gauteng because the South Corridor is not operational because of cable theft or infrastructure.”

She noted that even if the rail were functional, the financial burden remains a barrier. “If it would be operational now, we would have to pay more, and it’s the infrastructure cost of doing business which I tried to raise.”

Masina acknowledged the strain on municipalities, particularly ageing infrastructure, and stressed the need for stronger collaboration between local government and major investors.

As Volkswagen prepares for the 2027 launch of its new A0-entry SUV, known as Project Tengo, the success of current operations remains a prerequisite for the 2030 investment approval.

While South Africa confronts these challenges, Egypt’s automotive market has shown strong momentum. According to data published by the Automotive Market Information Council, vehicle sales reached 14 100 units in January 2026, compared to 10 150 units in the same period in 2025, representing a 38,7% year-on-year increase.

The performance was driven largely by passenger cars, which increased by 43,3% to around 10 900 units. The bus segment also showed growth, with 901 units sold compared to 698 a year earlier, while truck sales increased by 25 03% to 2 278 units, a key indicator of recovery in productive activity and domestic trade.

The January figures follow strong performances in recent months. In November 2025, vehicle sales surged by 54,7% year-on-year to around 16 800 units.

Egypt’s Industry Minister Khaled Hashem recently met with a delegation from Mercedes-Benz Egypt headed by chief executive Stefanie Volz to discuss opportunities to localise automotive manufacturing and expand the company’s operations. The discussions explored investment opportunities in line with the government’s strategy to deepen local manufacturing and facilitate the transfer of advanced technologies.

Dongfeng Box from SN Automotive in Egypt

Hashem noted that the Automotive Industry Development Programme represents a key pillar in attracting major international brands, offering incentives designed to localise the industry. The programme links investment incentives to increasing the share of local content and expanding domestic supply chains.

Volz expressed the company’s aspiration to further strengthen its strategic partnership with the Egyptian government, noting that Mercedes-Benz is marking 26 years of operations in Egypt.

Meanwhile, data compiled by the International Organization of Motor Vehicle Manufacturers shows South Africa consistently ranks among the countries with the highest car ownership in Africa, supported by a developed automotive industry, a relatively large middle class, and extensive road networks in major urban centres. Access to vehicle financing and a thriving used car market have also made ownership more attainable.

South Africa consistently ranks among the highest, supported by a developed automotive industry, a relatively large middle class, and extensive road networks in major urban centres. Access to vehicle financing and a thriving used car market have also made ownership more attainable for many households.

Libya has historically recorded high ownership levels due to low fuel prices stemming from its oil wealth, combined with long distances between cities and limited public transport options. Despite political and economic challenges in recent years, car ownership remains widespread.

Small island nations such as Mauritius and Seychelles also feature prominently, buoyed by stable economies, higher household incomes, and growing populations that increasingly rely on private vehicles for daily commuting.

Botswana and Namibia round out the list, where vast distances between communities make private transport a practical necessity. Both countries have invested heavily in road infrastructure in recent years, further supporting vehicle ownership.

Algeria and Morocco complete the picture as North Africa’s largest markets, with rising urbanisation and government policies encouraging local assembly driving demand across both countries.

In West Africa, Nigeria’s automotive aftermarket is drawing attention as a potential growth frontier. Industry estimates suggest the country’s spare parts market is worth between $5-billion and $6-billion annually, with new original equipment manufacturer components and aftermarket parts accounting for roughly 70% to 80% of that figure. Second-hand parts, commonly known as tokunbo, make up the remainder.

Mechanical engineer Okpamen Obasogie said the combination of a large replacement market, high import dependency and foreign exchange pressure has created a significant opportunity for localised spare parts manufacturing, particularly in high-turnover components such as brake pads, filters and suspension parts.

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Lathitha Mbambo: Breaking Gender Barriers in Automotive Trades

Service tools do not know if you are male or female - they respond to skill and focus. That is how 21-year-old Lathitha Mbambo describes her approach to the workshop floor at Hyundai Bellville in Cape Town, where she is upending expectations about who can excel in technical trades.

Mbambo (21) began her apprenticeship in June 2025 and has since serviced roughly 100 vehicles each month. To date, she has worked on more than 800 vehicles and maintained a clean record with no comebacks. In dealership language, comebacks refer to vehicles that return because faults were not properly resolved - a key measure of technical competence and quality assurance. For any technician, a zero-return rate across hundreds of services is notable. For a first-year apprentice, it is particularly striking.

"Every vehicle that comes into the workshop represents someone's safety and trust," Mbambo says. "I approach each service as if it were my own car. If I sign off on it, I want to be 100% confident it will not return with a fault."

Keevin Peters, Dealer Principal at Hyundai Bellville, said Mbambo's productivity matches that of experienced technicians. "In this business, comebacks affect customer confidence and operational efficiency. To see this level of dedication and consistency from an apprentice speaks to both her discipline and commitment."

Managing 100 vehicles a month demands mechanical knowledge, time management, diagnostic skill and attention to detail. Mbambo said she has learned small things matter. "A missed check today becomes a problem tomorrow. My motto is do it right the first time."

Her presence in the workshop also reflects a broader shift in the automotive sector, as more young women enter technical careers. She said the tools of the trade do not distinguish between genders - only between those who apply themselves and those who do not.

In a separate development highlighting the importance of skills development, Isuzu Motors South Africa has renewed its partnership with the Nelson Mandela University's Govan Mbeki Mathematics Development Centre. The collaboration, which began in 2018, focuses on strengthening mathematics and physical science education in under-resourced schools in Nelson Mandela Bay.

The programme combines learner support, teacher training and digital resources. In the 2025 matric exams, learners who participated achieved an 80% pass rate in both mathematics and physical science. That compares with national pass rates of 64% for mathematics and 77,3% for physical science. Of the 30 learners in the cohort, 25 qualified for bachelor's or diploma studies, opening pathways to tertiary education and careers in science, technology, engineering and mathematics.

Natalie Gill, project leader at the Govan Mbeki Mathematics Development Centre, said the initiative provides interactive digital tools and professional development for teachers. "With the support received from Isuzu, we have been able to empower a significant number of learners by strengthening connections between classroom learning and real-world challenges," she said.

Nandi Matomela, Department Executive for Corporate Affairs at Isuzu Motors South Africa, said education remains a core pillar of the company's social investment strategy. "Through this collaboration, we have encouraged the adoption of STEM subjects in our schools, aligning learning outcomes with the skills and needs of the future," she said.

Several former participants in the programme are now studying computer science, civil engineering, electrical engineering and accounting. The renewed partnership aims to expand access to innovative teaching tools and mentorship, supporting more young South Africans in pursuing opportunities in the STEM economy.

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New AfCFTA Rules Boost African Automotive Trade

The African Association of Automotive Manufacturers (AAAM) has described the approval of new trade rules for the automotive sector under the African Continental Free Trade Area (AfCFTA) as a major step forward for industrialisation on the continent.

The decision, formalised during the 39th Ordinary Session of the Assembly of African Union Heads of State and Government, paves the way for duty-free trade in vehicles and components across member states.

The Rules of Origin (RoO) for automotive products, which apply to customs codes 8701 to 8716, were initially agreed upon by ministers at the AfCFTA Council of Ministers meeting in Cairo in September 2025. The formal endorsement came from heads of state during their gathering in Addis Ababa, Ethiopia, recently.

Under the newly adopted framework, vehicles and components must contain at least 40% local content to qualify for preferential trade terms under the AfCFTA. This means up to 60% of materials may be sourced from outside the continent without affecting the product’s eligibility to be traded as ‘Made in Africa’. The arrangement includes a review clause after five years and is intended as an interim measure to encourage local manufacturing and value addition.

Victoria Backhaus-Jerling

Victoria Backhaus-Jerling, Chief Executive Officer of AAAM, said the agreement provides clarity that has long been needed by industry players. “For the first time, we have a clear and harmonised definition of what it means for a vehicle to be considered ‘Made in Africa’. This kind of certainty is what investors look for. It supports the development of regional supply chains and aligns with the broader goals of the AfCFTA Automotive Strategy.”

Wamkele Mene, Secretary-General of the AfCFTA Secretariat, noted the new rules offer legal predictability for manufacturers considering local production. “This approval gives the industry the assurance needed to invest in local assembly and component manufacturing. We encourage the private sector to build on this momentum and work with all stakeholders to ensure inclusive growth across the African automotive value chain.”

AAAM has been closely involved in the development of the framework, working alongside the AfCFTA Secretariat, Afreximbank, and various government bodies to shape rules that support local content development and job creation.

Martina Biene

Martina Biene, President of AAAM, highlighted the cooperative effort behind the milestone. “This achievement reflects what can be done when public and private sectors work together. The framework enables African countries to trade more competitively among themselves and lays the groundwork for the continent to become a more serious participant in global automotive markets.”

With the rules now in place, countries that have committed to immediate or phased tariff liberalisation under AfCFTA categories A and B will be able to begin preferential trade in automotive goods. The move is expected to support the growth of local assembly and component manufacturing, and over time, give African consumers access to more affordable vehicles produced within the continent.

https://bit.ly/4qM9HkR

Andrew Kirby Sounds Alarm on SA Motor Industry's Decline

Andrew Kirby did not mince words when he talked about South Africa’s motor industry. He described a sector losing ground—local content is dropping quickly, exports are too dependent on Europe, and while the world races toward electric vehicles, South Africa’s barely off the line.

Andrew Kirby

Honestly, it was the bluntest industry review anyone has made in years. Kirby, president and CEO of Toyota South Africa Motors, recently presented the 2026 State of the Motor Industry address and skipped the usual talk about resilience or market share. Instead, he pointed directly at the cracks in one of South Africa’s last big manufacturing pillars.

He did not soften the numbers. Right now, only a third of cars sold in South Africa are built here. In 2006, it was 56%. The decline is speeding up. Kirby’s outlook for 2026? Even worse.

“We really lack scale in South Africa,” he said. He meant more than just production numbers—he pointed to the country’s population, limited public transport and basic mobility needs. “We should be much bigger than this.”

Last year’s headline—600 000 vehicles sold—sounds impressive if you do not look deeper. But Kirby did. Take away the increase in cheap, entry-level cars and there is hardly any actual value growth.

“It’s not all that it seems,” he cautioned.

Toyota's manufacturing facility in Prospecton near Durban

Exports look good on paper—609 000 vehicles produced last year, 411 000 exported. That is 68% of local output, mostly to the UK and EU. At first glance, it seems like a win. Look closer, and it is a vulnerability.

Eighty-one percent of those exports go to Europe and the UK. Africa, once important, now only takes 8%. The continent is flooded with used imports and cheap new cars from the Middle East, so private buyers barely count. Most sales rely on government fleets.

“We can’t just shrug and say we’ll export everything to Europe,” Kirby said. “Because those 400 000 exports? That is going to change.”

Regulations are moving quickly. The UK wants zero-emission vehicles, Europe is tightening emissions rules, and every new regulation makes it harder for South Africa to keep up (even with US President Donald Trump removing carbon restrictions).

Temporary extensions for hybrids or low-carbon steel do not fix the issue; they just show how unstable the electric vehicle sector still is. That uncertainty makes long-term planning impossible.

“In the next five years, we’re going to see a big drop in exports to Europe and the UK,” Kirby warned.

South Africa simply does not have a competitive electric vehicle industry yet. The few new energy vehicles sold locally are not made with local parts. No scale, no localisation. No localisation, no cost advantage. It is a loop South Africa cannot escape—and time’s running out.

Kirby’s strongest point came when he spoke about real value addition. That is the core of any manufacturing sector. In 2000, South Africa’s auto manufacturing value was $720 per person. Now? It has dropped to $614. Not only no growth, but a step backwards.

“We’re de-industrialising too soon,” he said. “Are we seeing the first signs of that in auto?”

He mentioned Vietnam—and not by chance. Smart policy has let Vietnam surge ahead, while South Africa has lost advantage after advantage. Electricity is costly, even with improved loadshedding. Wages rise faster than inflation. Water is now a concern—Toyota had to build its own dam to keep operating. Logistics, especially rail, remain expensive, even after port improvements.

Production at the Toyota factory in South Africa

The entire supply chain is under strain. Steel, tyres, the network of component makers built up over decades—all are feeling the pressure.

“We’re lucky we spent 100 years building this manufacturing base,” Kirby said. “If we lost it now and tried to restart in 2026, it wouldn’t happen.”

Right now, the industry needs a serious, honest discussion about policy—before it is too late.

Kirby made one thing clear—he is not looking for quick fixes or dramatic interventions. That is not the point. What he is after is harder: a smart, well-run industrial policy. One that understands the difference between a healthy import market and replacing imports just for the sake of it.

“To be honest, the country just can’t afford that,” he said, referring to heavy-handed import substitution. “The foreign exchange hit is massive, and it’s something we often overlook.”

His argument? Instead of sweeping changes, he is calling for targeted, incremental adjustments to strengthen competitiveness without blowing the budget. The aim: raise local content back up to 40%-50%. Not by hiding behind tariffs, but through timely policies that recognize imports are necessary, though over-reliance carries risks.

He was equally blunt about new energy vehicles. South Africa does not have the option to say the transition is unaffordable.

“If we say we cannot make the shift, we are giving up on exports as well. All we will have left is making outdated tech for a shrinking market,” Kirby said. “That’s just not the way South Africa has operated over the past hundred years.”

Toyota’s strategy sums it up—they are investing in multiple technologies: hybrids, plug-in hybrids, battery electrics, fuel cells, even carbon-neutral hydrogen engines. There is no single solution, and in South Africa, hybrids will dominate for years. But the issue is clear: only 4% of new energy vehicles sold locally are built here. That gap is right in front of us.

This is not a promise—it is a possibility

The bz4x will be the first electric model launched in South Africa by Toyota

Kirby sees a real opportunity. With the right policies—now, not next year—the local market could surpass 700 000 units. Manufacturing could reach 720 000. That would mean R21-billion more in value and 14 500 new jobs, not counting the broader impact.

“Our planning window is three to four years,” he said. “We are already investing, and to be honest, we are running behind. If we can get this sorted by 2026, it will decide our investments for 2029 and 2030.”

He did not state the warning outright, but it is clear. Other countries are securing investment through clearer strategies and more stable policies. South Africa is competing for those same opportunities, but it is a tough race.

Still, Kirby sees something positive—a genuine, open dialogue between government, labour, and the industry group, naamsa. People are speaking honestly. But talking is not policy.

“We need to act. Now,” he said.

Compete, do not collapse!

Goolam Ballim, Standard Bank’s Chief Economist, set out the bigger picture. The world is not breaking down—it is reorganizing. Alliances, supply chains, the rules of the game—they are all changing. Now, resilience is more important than squeezing out every bit of efficiency.

For South Africa, this shift is both a risk and an opportunity. The old model—relying on a single export market, importing finished vehicles, and exporting most of what we build—is fading. What happens next depends on the decisions we make now.

Kirby’s remarks stood out because he was direct. He identified the problems, put real numbers on what is at stake, and outlined a practical goal. He did not minimize the challenge, but he was clear: the solutions are there if we are ready to move.

“We shouldn’t just ask how to avoid becoming an import replacement market,” he said. “We need to figure out how to build something stronger—to support the circular economy, create jobs, develop skills, and grow a dynamic auto industry and industrial base.”

Now it comes down to this: can policy move quickly enough to match the market? The window is open, but it will not stay open for long.

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Afreximbank Membership: Transforming South Africa's Auto Market

In a strategic move poised to reshape the continent’s economic landscape, South Africa’s recent accession as a shareholder of the African Export-Import Bank (Afreximbank) is being heralded as a potential game-changer for its cornerstone auto industry.

Analysts suggest the decision could unlock crucial finance, accelerate the implementation of the African Continental Free Trade Area (AfCFTA), and ultimately steer the sector towards a more prosperous, integrated future.

A US$8-billion commitment: HE Cyril Ramaphosa, President of South Africa and Dr George Elombi, President and Chairman of Afreximbank at the Country’s accession signing ceremony, marking the launch of a major Country Programme engineered to bolster the South African economy

The local automotive industry, a critical pillar of the national economy contributing nearly 5% to GDP and supporting hundreds of thousands of jobs, has long grappled with the challenges of limited scale, fragmented markets, and expensive access to trade finance. Joining Afreximbank directly addresses these pain points.

The most significant potential impact lies in the synergy with the AfCFTA. While the agreement promises a continental market of 1,3-billion people, its rollout has been hampered by logistical hurdles, payment system disparities and a simple lack of trade finance tailored for intra-African commerce.

Afreximbank, a key financial architect of the AfCFTA, operates the Pan-African Payment and Settlement System (PAPSS), which allows for instant cross-border payments in local currencies.

The macroeconomic outlook for local automakers, battered by global supply chain woes and sluggish domestic demand, stands to gain substantially. Increased export volumes into Africa would improve plant utilisation in places like Kariega, East London, and Rosslyn, enhancing economies of scale and potentially making local production more cost-competitive globally.

Furthermore, Afreximbank’s project finance capabilities could attract investment into the critical transition to new energy vehicles, however success hinges on our local industry’s agility to produce vehicles competitively tailored for diverse African consumers and on government’s parallel work to fix our ports, rails and energy supply.

If these domestic challenges are met, the combination of Afreximbank’s financial muscle and the AfCFTA’s market access could transform South Africa from a powerhouse serving mainly its domestic and traditional European export markets into the undisputed automotive hub of Africa.

The journey has begun, and the industry is now watching closely to see how quickly the promised finance flows onto the factory floor and out through the continent’s borders.

More than 2-million VW Polo models have been built at the Kariega plant

As always, there is a ‘but’ and in this case it comes from Volkswagen South Africa.

When Volkswagen Group Africa (VWGA) chairperson and managing director Martina Biene wrote to President Cyril Ramaphosa shortly before Christmas, it was an effort to push urgency into a process she believes has dragged on far too long, with real implications for the future of South Africa’s automotive industry.

Speaking at VW’s annual Media Indaba in Kariega, Biene said: “I wrote a letter to the President prior to Christmas. I mainly outlined that for us at VWGA, this year is crucial for securing an investment decision from VW headquarters for the next project in the pipeline.”

Her request was straightforward: clarity. Not only on the financial viability of future projects, but also on whether South Africa’s policy direction gives investors enough confidence to commit long-term capital.

“For this investment decision, they look at the economics and the business case,” she explained. “But headquarters also look at what’s happening in the country. One of their non-negotiables is seeing improvement in South African policies.

“You might have a business case,” she cautioned, “but there are stronger business cases elsewhere if we can’t show that investing here is sustainable.”

She didn’t mince her words: “This year for us is make or break.”

Professor Adrian Saville, economist and strategy specialist at GIBS, echoed the concern. Asked whether a major manufacturer could realistically leave South Africa, he didn’t hesitate.

“Could a specific business leave? Absolutely. Capital can go anywhere,” he said. “There are 200 markets you can choose to allocate capital to. There’s nothing that guarantees South Africa a place at the front of the queue.”

Saville pointed out that the country’s industrial history is full of once‑significant manufacturers that no longer exist. “South Africa is an industrial graveyard. No company is too big, too established or too important to walk away if conditions deteriorate.”

Despite the seriousness of her message, Biene says she received no direct reply from Ramaphosa. “The unfortunate thing is that the President didn’t reply to me,” she confirmed.

She did note that there has since been activity between the Automotive Business Council (Naamsa) and the Presidency’s staff, suggesting the letter may have prompted some movement behind the scenes.

Whether that translates into actual policy progress remains unclear. “Am I satisfied with that? I don’t know,” she said.

Saville argues that certainty alone isn’t enough if the underlying policy is weak. “Policy certainty over a policy that doesn’t work is a death blow,” he said. “We’ve got a knife at a gunfight.”

Still, both he and Biene acknowledge that South Africa has shown it can get policy right. The Automotive Production and Development Programme and the South African Automotive Masterplan are often cited as examples of what’s possible when government acts decisively.

The challenge, Biene says, is timing. “We don’t have the luxury of two or three years of debating and deliberating. The requirement is urgent.”

Her letter to the President was intended to make that point clear. Whether the message lands will matter not only for Volkswagen, but for the entire vehicle manufacturing sector in South Africa.

https://bit.ly/3MsFyZQ

Morocco vs South Africa: The Future of the Automotive Industry

A strategic shift is unfolding across the African automotive landscape, defined not by a single event but by a confluence of ambitions in boardrooms from Casablanca to Johannesburg. The recent, quiet establishment of Tesla’s commercial presence in Morocco, signaled by the recruitment of a Country Sales & Delivery Leader in Casablanca, represents more than a new showroom; it is a calculated entry into a market being deliberately engineered as an electric vehicle hub.

This move coincides with a parallel gravitational pull from Chinese automotive manufacturers toward South Africa’s established industrial base, setting the stage for a continental transformation driven by competing visions of the future.

BAIC factory in South Africa's Eastern Cape

Morocco’s ascent is not accidental. While its overall vehicle production of 559 645 units in 2024 trails South Africa’s historical output, its trajectory and focus are distinct. The kingdom is poised to manufacture between 40 000 and 50 000 fully electric vehicles in 2024, a figure that underscores a targeted industrial policy.

This output is particularly significant given that South Africa has yet to produce a single fully electric vehicle domestically. Morocco’s 5% year-on-year production increase is built upon foundational advantages: geographic proximity to European markets and a charging infrastructure network of approximately 1 000 stations, dwarfing South Africa’s estimated 400-500.

Government policy has been instrumental in creating a fertile environment. Exemptions from value-added tax and customs duties on EV imports have lowered financial barriers for consumers and manufacturers alike. The market response is quantifiable, with EV sales reaching 1 125 units in 2024 and projected to surge to 4 248 in 2025.

Toyota's Prospecton factory near Durban, Kwa-Zulu Natal

This policy framework, designed to position Morocco as a central hub for EV manufacturing and sales, is what makes Tesla’s entry a strategic beachhead. The American automaker’s presence is widely interpreted as a move to capitalize on this surging demand and the country’s export-oriented logistics, potentially encouraging other EV-focused brands to consider North Africa.

“The country offers a mature industrial ecosystem, a skilled and experienced workforce, and a supply chain that has been tested and proven over decades,” says Lydia Zhang, Executive Vice President for Client Coverage in Corporate Investment Banking at Standard Bank, quoted recently in FANews. Zhang notes  South Africa’s role as a gateway to a continent with low motorisation rates presents a compelling investment rationale.

Yet, South Africa’s path is markedly different. Its automotive sector, a cornerstone of manufacturing for decades, finds itself at a crossroads. The rise of Chinese brands like Chery, GWM, BYD and BAIC has reshaped the domestic market, moving them from fringe players to household names based on affordability and improving quality.

This commercial success is now prompting deeper consideration. Several leading Chinese original equipment manufacturers (OEMs) have launched feasibility studies into establishing local assembly plants in South Africa, attracted by the existing supplier base and potential for continental growth.

This interest emerges as traditional manufacturers reassess their South African operations. The potential vacuum creates an opportunity, but one fraught with the nation’s well-documented challenges. “Infrastructure constraints, including energy supply and logistics, continue to be monitored,” Zhang observes, adding investors seek clarity on tariffs, labour laws and long-term policy.

The policy environment itself is a subject of intense debate. Experts argue South Africa’s automotive tax structure inadvertently undermines its own industrial ambitions.

Ford Ranger assembly in the modern plant in Rosslyn, Pretoria

“Our vehicles are overtaxed,” says Professor Justin Barnes, Executive Director of the Toyota Wessels Institute for Manufacturing Studies. He highlights an “inverted market structure” where ad valorem taxes are disproportionately high for cheaper vehicles, stifling domestic demand. Furthermore, the duty differential between imported completely built-up (CBU) units and locally assembled completely knocked-down (CKD) kits is considered too narrow, disadvantaging local component manufacturers who effectively compete against near-zero import duties.

South Africa’s Automotive Masterplan 2035 envisions producing 1,4-million vehicles annually, with half for the domestic and regional African market. Currently, the structure is inverted; the country imports more vehicles than it manufactures for local consumption. “We need a robust domestic market and need to make the regional market our operating environment,” Barnes argues. Failure to do so, he contends, leaves South African producers vulnerable to the demanding and rapidly shifting requirements of distant developed export markets, particularly as they transition to new-energy vehicles (NEVs).

This NEV transition is where the contrast with Morocco becomes stark. South Africa’s high import tariffs and limited purchase incentives have resulted in a negligible EV market. The finalization of a revised Automotive Production and Development Programme (APDP) framework to incentivize NEV production is seen as crucial. Such a policy could unlock a strategic advantage: South Africa’s duty-free trade access to Europe. This access could position the country as a manufacturing and export base for Chinese OEMs keen to produce NEVs for the European market.

“While we would expect Chinese OEMs to begin with semi-knocked down or limited-scale assembly, it is important that this evolves into full-scale CKD production within a defined timeframe,” says Lydia Zhang. “We see this progression as critical for job creation and meaningful local industry participation.”

The emerging picture is of a continent with two powerful, divergent automotive narratives. In the north, Morocco is leveraging agile policy, geographic advantage, and infrastructure investment to build a new, EV-centric manufacturing ecosystem from the ground up, attracting global pioneers like Tesla. In the south, South Africa’s established industrial complex, while grappling with internal policy contradictions and infrastructure woes, presents a compelling case for large-scale, traditional manufacturing investment, increasingly attractive to Chinese brands seeking scale and continental access.

The outcome will hinge on execution. Morocco must convert its potential into sustained industrial depth. South Africa must align its tax and trade policies with its masterplan ambitions to unlock regional demand and attract transformative investment. Together, these parallel developments signal that the African automotive industry is no longer on the periphery of global trends but is becoming a complex and contested arena where its future footprint is now being forged.

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The New North African Nexus: How Tunisia, Egypt, and Morocco are Vying for Automotive Supremacy

Something big is happening in North Africa, and it’s not what most people expect. The region’s old image—one of aid packages and political uncertainty—is fading fast. These days, it’s the roar of engines and the hum of factory floors driving the story.

While South Africa continues to dither in uncertainty, the automotive industry is taking center stage, pulling in massive investment and turning the area into a fierce battleground for the future of mobility. Tunisia, Egypt and Morocco are now competing for a spot at the top, each trying to outdo the other – and South Africa – in this billion-Rand race.

Image: Supplied

Tunisia’s latest play is grabbing headlines. After a high-profile visit from Li Shijie—a senior figure in the Chinese People’s Political Consultative Conference—Tunisia’s Foreign Investment Promotion Agency (FIPA) announced a real milestone: 22 Chinese companies are now operating in the country. That’s over R2-billion in foreign direct investment and roughly 1 100 new jobs on the ground.

Sleeves Rolled Up

But it’s not just about handshakes and speeches. At the meeting, FIPA’s Director General Jalel Tebib and Li Shijie rolled up their sleeves and got specific. They’re laser-focused on channeling Chinese investment into Tunisia’s sweet spots: automotive manufacturing, renewable energy, infrastructure, and tourism.

Tebib talked up Tunisia’s open-door policy and business-friendly climate, while Li pointed out the country’s skilled, affordable workforce, its prime location as a gateway to Europe and Africa, and the attractive trade deals that come with it. Both sides are betting big on their partnership, tying it all together with China’s Belt and Road Initiative.

Zoom in to the ground level and you’ll find the real pulse of this industrial shift: local innovators. Enter Bako Motors, a Tunisian startup that’s betting everything on solar-powered vehicles. Instead of following the crowd, Bako is using Africa’s most abundant resource—sunshine—to power their EVs.

Africa’s electric vehicle market is exploding, expected to top R76-billion by 2030. But there’s a catch: most EVs still rely on patchy power grids, which don’t always play nice. Bako Motors spotted a gap. Their solution? Compact cars and cargo vans with solar panels built right into the roof.

Image: Supplied

“Our solar cells cover more than half our energy needs,” says Boubaker Siala, Bako’s founder and CEO. “Look at our B-Van, designed for commercial deliveries—you get free energy for about 50 kilometers a day, which adds up to 17 000 kilometers a year. For businesses watching every Rand, that’s a game-changer.”

Three Wheels

Bako kicked off in 2021 with three-wheeled cargo vehicles, but they’ve quickly leveled up. Now, their four-wheeled B-Van hauls up to 400 kg and delivers a range between 100 km and 300 km. It’s priced from R1,6-million, aimed squarely at logistics and last-mile delivery companies. Their other model, the Bee, is a pint-sized two-seater perfect for city errands, starting at R1,2-million.

Sure, production is still modest—around 100 vehicles—but they’re thinking big. A third model is already on the drawing board, and the team’s gearing up for an export push, hoping their solar-powered EVs will carve out a niche across Africa.

Of course, Tunisia isn’t the only player in the game. Egypt and Morocco, the region’s heavyweights, are ramping up their own efforts with massive investments.

In Egypt, the government’s pulling out all the stops. At a recent ceremony in West Cairo Deputy Prime Minister Kamel Al-Wazir laid the foundation for the new MAC for Mobility Manufacturing Plant, bankrolled by the powerhouse Mansour Automotive Group. Think big—over R2,7-billion in initial investment. The goal? Produce 50 000 eco-friendly vehicles in the first phase alone.

Mansour Group’s chairman, Sir Mohamed Mansour, says the plant will bring in cutting-edge technology and create between 6 000 and 10 000 jobs. This is the start of Egypt’s Automotive Industry Development Strategy, aiming for a homegrown, fully integrated automotive sector. By 2032, they’re targeting annual production of 100 000 vehicles per major manufacturer, including 7 000 EVs, and want at least 35% of every car to be locally sourced.

Image: Supplied

“This factory is the seed of a future automotive city,” Al-Wazir said, framing it as the heart of Egypt’s plan to become a regional manufacturing hub for Africa and the Middle East.

Ramping Up

Not to be outflanked, Morocco continues its relentless ascent. The kingdom is already producing over a million vehicles annually and has plans to ramp this up to 2-million. The latest evidence of its momentum is the opening of a new R300-million factory in the Oujda Technopole by Austria’s Hirschmann Automotive.

The new 22 200-square-metre facility, set to create 600 new jobs, complements the company’s existing plant in Kenitra and underscores the country’s deep integration into global automotive supply chains.

During the inauguration, Khatib El Hebil, the Wali of the Oriental region, captured the sentiment, noting, “Oujda, a city of history and culture, is gradually transforming into a true hub for industrial, logistical, and technological development.”

The Road Ahead

The North African automotive landscape is now a tripartite race. Morocco is the established, export-oriented leader. Egypt is the massive domestic market leveraging its scale and government backing to force a dramatic localisation drive. And Tunisia is the agile newcomer, betting on niche innovation and strategic partnerships to carve out its own space.

For global investors and automotive giants, this competition is a boon, creating multiple, compelling options for manufacturing and assembly. For the continent, it signals the emergence of a sophisticated industrial corridor capable of not just assembling, but designing and engineering the vehicles for Africa’s future. The race for North African automotive supremacy is on, and the finish line is a multi-billion Rand prize.

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Boosting South Africa's Auto Industry Through Local Beneficiation

For decades, South Africa’s automotive industry has been a cornerstone of the local manufacturing sector, a testament to our industrial capability. From the bustling assembly lines in Kariega and Rosslyn to the state-of-the-art plant in East London, we build world-class vehicles. Yet, beneath the hum of this R500-billion-a-year industry lies a profound paradox: we are a mineral-rich nation exporting the very raw ingredients that could see us not just assemble but truly create the cars of the future.

The global automotive industry is undergoing its most significant transformation in a century, pivoting towards electric vehicles (EVs), lightweighting for efficiency and smart, connected technologies. This shift is not just about engines and software; it is a fundamental change in the materials that go into a car. For South Africa, this presents a generational opportunity to move up the value chain. The key lies in local beneficiation—the process of transforming mined ore into a higher-value product.

Here are the five most critical raw materials that, if beneficiated locally, would provide an unparalleled boost to the South African auto industry, creating jobs, fostering innovation, and securing our place in the global value chain.

1. Platinum Group Metals (PGMs): The Crown Jewels of Catalysis and Hydrogen

Image: Implats

The Raw Material: South Africa sits on roughly 80% of the world’s known platinum group metal reserves. These include platinum, palladium and rhodium.

Current State: We are the world’s leading miner of PGMs, but the vast majority is exported as refined metal or concentrate. We capture the mining risk and volatility but miss out on the immense value of specialised industrial and chemical applications.

The Beneficiation Opportunity: The narrative around PGMs is evolving. While their use in catalytic converters for internal combustion engines remains crucial, their role in the hydrogen economy is transformative.

Fuel Cell Electric Vehicles (FCEVs): FCEVs use hydrogen to generate electricity, with water as the only emission. The heart of a FCEV is its fuel cell, which requires significant amounts of platinum as a catalyst. Local beneficiation could see us move from exporting platinum bars to manufacturing catalyst-coated membranes (CCMs) or even entire fuel cell stacks.

·           Green Hydrogen Production: The other side of the hydrogen coin is production. Platinum is also a critical catalyst in proton exchange membrane (PEM) electrolysers, which produce green hydrogen using renewable energy.

The Impact: By establishing local facilities to manufacture fuel cell components and electrolysers, South Africa would not only supply the global auto industry but also catalyse its own domestic hydrogen economy. This creates a symbiotic ecosystem: local platinum enables cheaper green hydrogen, which powers local FCEVs and heavy transport, creating a circular and globally competitive advantage.

2. Aluminium: The Backbone of Lightweighting

Image: South32

The Raw Material: South Africa has a well-established aluminium industry, centred around smelters like Hillside in Richards Bay, which rely on imported alumina. However, we have vast reserves of bauxite and kaolin, the primary aluminium ores, which are largely unexploited for metal production.

The Beneficiation Opportunity: Every kilogram saved in a vehicle's weight translates directly into better fuel efficiency or longer battery range in an EV. Aluminium is the second most used material in vehicles after steel.

Primary and Secondary Smelting: Investing in energy security to make primary smelting more viable, and aggressively expanding the recycling of automotive scrap aluminium, would create a stable, low-cost local supply.

Advanced Alloy Production: Cars do not use generic aluminium; they require specific, high-performance alloys for body panels, chassis components, and battery enclosures. Local beneficiation means establishing plants that can produce these specialised automotive-grade aluminium sheets and extrusions.

The Impact: A reliable, cost-effective source of high-quality automotive aluminium would be a powerful magnet for Original Equipment Manufacturers (OEMs). It would lower the cost of production for local assemblers and make South Africa an attractive hub for manufacturing lightweight vehicle components for export, particularly for the EV market.

3. Manganese: Hardening the Steel of Our Ambition

Image: Implats

The Raw Material: South Africa holds over 70% of the world’s manganese resources, a metal indispensable to modern steelmaking.

Current State: We are the world’s largest producer and exporter of manganese ore, but we export most of it with minimal beneficiation. The real value is in adding it to steel.

The Beneficiation Opportunity: Manganese is a key alloying element that adds strength and wear-resistance to steel. Over 50% of a modern car's weight is still high-strength steel.

Ferromanganese Production: The first critical step is to expand our existing capacity to produce ferromanganese (a key intermediate product). The real prize, however, lies beyond.

Automotive Steel Production: The goal is to channel our local manganese into the production of advanced high-strength steel (AHSS) and ultra-high-strength steel (UHSS) at local mills like ArcelorMittal South Africa. These specialised steels are essential for making passenger safety cages and components that are both lighter and stronger.

The Impact: Creating a fully integrated pipeline from our manganese mines to local AHSS production would decouple our auto industry from volatile global steel prices and supply chain disruptions. It would provide a unique, raw material-based competitive edge for both our vehicle manufacturers and our component suppliers.

4. Iron Ore: The Foundational Metal, Reforged

Image: Arcelor Mittal

The Raw Material: We are a major global producer of high-quality iron ore from the Sishen mine and others in the Northern Cape.

At present, although ArcelorMittal uses some of this ore domestically, a sizeable portion is shipped overseas. The local steel industry has faced well-documented challenges, from energy costs to global competition.

The Beneficiation Opportunity: The opportunity with iron ore is not just about making more steel but making smarter steel specifically for the automotive sector. This goes together with manganese beneficiation.

Direct Reduced Iron (DRI): As the world moves towards greener steelmaking, DRI technology using green hydrogen (itself enabled by local PGMs) presents a path to produce "green steel" with a significantly lower carbon footprint.

Specialised Automotive Castings: Beyond sheet steel, local foundries can use high-purity iron to produce sophisticated engine blocks, brake components and other critical castings, moving beyond basic parts to high-value, precision items.

The Impact: A revitalised, competitive, and increasingly green local steel industry is non-negotiable for a resilient auto sector. It provides the foundational material security without which the industry cannot confidently plan for long-term growth and export-led expansion.

5. Vanadium: Powering the Electric Revolution

Plugged in chargers into two electric cars at charge station

The Raw Material: South Africa is one of the world's top three vanadium producers, with massive reserves housed in the Bushveld Igneous Complex.

Current State: Almost all our vanadium moves overseas as ferrovanadium or vanadium pentoxide, primarily for strengthening steel abroad.

The Beneficiation Opportunity: Vanadium’s star is rising because of one technology: Vanadium Redox Flow Batteries (VRFBs).

Stationary Energy Storage: The stability of South Africa’s auto manufacturing is hamstrung by an unreliable grid. VRFBs are ideal for large-scale, industrial energy storage. They can provide backup power for entire manufacturing plants, mitigating the impact of load-shedding.

EV Battery Ecosystem: While not used in the vehicle's battery itself, VRFBs are crucial for charging infrastructure. They can store solar energy during the day to power fast-charging stations at night, solving a key hurdle for widescale EV adoption.

The Impact: Local beneficiation of vanadium into electrolyte and full battery systems would directly support the auto industry by decarbonising and securing its energy supply. It creates a new, high-growth industry in energy storage that dovetails perfectly with the needs of modern, energy-intensive automotive manufacturing and the EV ecosystem.

The Road Ahead: An Integrated Strategy

Toyota's Prospecton plant

These five materials are not isolated opportunities; they are interconnected. Local PGMs can enable the green hydrogen needed for green iron and steel production. That manganese-rich, green steel, in turn, is used to build the factories and chassis for vehicles whose manufacturing is secured by vanadium batteries and whose powertrains may be powered by platinum-based fuel cells.

Realising this vision requires more than just market forces. It demands a coherent and aggressive industrial strategy—a partnership between government, mining houses, and the automotive industry. This includes:

· Policy Certainty: Creating a stable regulatory environment that incentivises local value-addition over raw exports.

· Investment in Energy: Solving the electricity crisis is the absolute prerequisite. The beneficiation of aluminium, iron and vanadium is intensely energy dependent.

· Research & Development: Establishing centres of excellence focused on mineral beneficiation and its application in the automotive and energy sectors.

The raw materials are beneath our soil. The industrial base is in our factories. The choice is ours: to continue digging and shipping, or to start building, innovating, and powering the next generation of global mobility. The road to a richer, more industrialised South Africa is, quite literally, paved with the minerals we already own.

This article is based on research from the Minerals Council South Africa, the Department of Trade, Industry and Competition (the dtic), Automotive Production and Development Programme (APDP) reviews and reports from the International Energy Agency on critical minerals.

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South Africa's Automotive Industry: Challenges and Opportunities Ahead

GQEBERHA – The South African automotive industry, a cornerstone of the nation’s manufacturing landscape, gathered this week to celebrate a significant milestone while charting a deliberate course through a period of global transition.

At the fourth South African Auto Week, naamsa: The Automotive Business Council commemorated its 90th anniversary, reflecting on a legacy of partnership and looking ahead to the challenges and opportunities presented by the global shift to new energy vehicles.

The acting Premier, Mlungisi Mvoko, also serving as the event’s ambassador, opened the proceedings by acknowledging the vital role of media collaboration and the growth of the gathering itself. The event served as a platform to recognise naamsa’s nine-decade journey, which began in this very city before its offices moved to Pretoria in 1983.

The association was lauded for its consistent work in shaping policy, driving innovation, and integrating the domestic industry into international value chains. Today, representing 56 brands, naamsa continues to operate on the principles of free enterprise and collective advancement for its members.

The annual industry report presented a picture of a sector demonstrating resilience amid headwinds. For the first time since the pandemic-related disruptions of 2020, the sector experienced a modest contraction in 2024. The total export value of vehicles and automotive components saw a decrease of R 2-billion, settling at R 268,8-billion, down from the previous year’s record of R 270,8-billion.

Despite this dip, automotive exports still constituted a substantial 40,7% of South Africa’s total merchandise exports for the year. In terms of volume, vehicle exports declined to 390 844 units from 399 809 units in 2023.

A notable bright spot emerged in the components sector, where export value increased from R 203,9 billion in 2023 to a record R 25,4-billion in 2024, a shift attributed to a changing mix of vehicles being exported. The industry also successfully expanded its global footprint, now sending products to 155 countries, up from 148 in 2023, with export value more than doubling to 39 of those nations.

The automotive sector’s role as a primary driver of South Africa’s manufacturing output remains undisputed. In 2024, vehicle and component manufacturing contributed 2,6% to the domestic manufacturing output, with the broader automotive industry contributing 5,2% to the national GDP. Investments from original equipment manufacturers and their suppliers amounted to R 10,25-billion.

A long-term perspective underscores the sector’s enduring impact. From 1995 to 2024, over 6,4-million vehicles, with a cumulative export value of R 1,95-trillion, have been shipped from South African shores. International trade agreements, particularly with the European Union and the United Kingdom, continue to be fundamental, accounting for 75,7% of exports in 2024, meaning three out of every four exported vehicles were destined for these regions.

The current year presents a complex operating environment. Geopolitical challenges, including new US import tariffs, have led to the loss of an estimated 25 000 vehicle orders from that market. Despite this, vehicle exports for the first half of 2025 were 3% ahead of the same period in 2024, even as overall production decreased by 2,2%. Domestically, new vehicle sales showed a strong increase of 14% for the first six months, a trend partly driven by a 69% influx of competitively priced imported vehicles.

A subsequent presentation struck a more cautious note, revealing that South Africa’s share of global vehicle production decreased from 0,67% in 2023 to 0,65% in 2024. This places the government’s 2035 target of achieving a 1% global market share under pressure. A central concern raised was the urgent need to transition towards electric vehicle production, as key export markets like the EU and UK move to ban new internal combustion engine vehicle sales by 2035. While some local manufacturers produce hybrid vehicles, none currently assemble battery electric vehicles domestically.

“The transition to new energy vehicles must be tailormade for a South African context and cannot be a carbon copy of what other countries and regions have done,” Neale Hill, CEO of Ford South Africa stated. He suggested that dramatic overhaul is not needed, but rather selective, targeted policies to support specific parts of the value chain where South Africa can be competitive.

The presentation concluded by highlighting a significant potential advantage. Africa, and South Africa in particular, holds vast mineral resources critical for the EV revolution, including 85% of the world’s manganese and 80% of its platinum. A clear call was made for immediate and structured collaboration between government and industry to develop a concrete framework, positioning the country to become a key player in the global EV value chain and secure the future of the automotive industry and its workforce.

“We are very concerned that our industry is falling behind Africa’s progressive automotive and industrial policy measures,” Hill warned. He concluded that the decisions taken now will fundamentally shape the future of vehicle manufacturing in South Africa, impacting its economic value, employment, and skills base. “We must act now before it is too late,” he said.

Adding to the forward-looking dialogue, Mike Whitfield, CEO of Stellantis South Africa, reflecting on the sector’s foundations, emphasised that its strength is rooted in historical cooperation between government, industry, and labour. He pointed to a major strategic development: the confirmation that Stellantis is proceeding with an investment in South Africa, affirming the country’s role as a strategic manufacturing base within the company’s global network.

This sentiment was echoed in a significant international achievement for the industry. naamsa announced that its CEO, Mikel Mabasa, has been nominated to serve as a permanent member of the International Organization of Automobile Manufacturers (OICA). Described as a “United Nations Security Council for the automotive industry globally,” this position will enable South Africa to help shape the global automotive trajectory and ensure the African continent is not left behind in critical conversations about the future of mobility.

As the week’s discussions concluded, the message from Gqeberha was clear. The South African automotive industry, built on nine decades of collaboration and adaptation, stands at a pivotal moment. The path forward requires agility, policy certainty, and a united effort to harness its inherent strengths—from its deep manufacturing expertise to its mineral wealth—to navigate the electric future and secure its position as a global automotive player.

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Illegal Vehicle Imports Hinder African Automotive Goals

ALGIERS – A concerted drive by African nations to build a integrated continental automotive industry is facing a formidable obstacle: the pervasive influx of illegally imported used vehicles and a critical lack of affordable financing for new cars.

This challenge was a central theme at the recent African automotive forum, part of the Intra African Trade Show, where policymakers and industry leaders outlined an ambitious vision to transform the continent from a primary importer of vehicles into a global manufacturing and export hub under the African Continental Free Trade Area (AfCFTA).

Chery Tiggo 2 Pro on display at the Africa Automotive Show in Algiers

A key pillar of this strategy, according to Gainmore Zanamwe, Director of Trade Facilitation for the African Export-Import Bank (Afreximbank), involves “freezing out second-hand vehicles imports” and “incentivising local production” to ensure Africa becomes a “manufacturing hub for mobility” rather than a “dumping ground for vehicles.”

However, this ambition clashes with the current market reality. Data indicates while new vehicle sales across the continent sit at approximately 1,2-million units annually, the number of used vehicle imports, both legal and illegal, far exceeds this figure. In South Africa alone, it is estimated over half a million illegally imported used cars are on the roads, representing a significant drain on national revenue.

“This illegal trade is not just a statistic. It is a direct attack on our economy,” says Martina Biene, President of the African Association of Automobile Manufacturers (AAAM) and CEO of Volkswagen Group Africa: “It drains our fiscus between five and eight billion Rand every year in lost taxes. It undermines our local manufacturers and holds back our industrial development.”

Stellantis stand showing Fiat Panda parts that are made locally

The demand for used vehicles is primarily driven by affordability. High interest rates across many African nations, often reaching double digits, place formal new vehicle financing out of reach for a large portion of the population. Financial institutions also cite challenges with vehicle tracking and valuation as barriers to offering more accessible credit.

“The issue is that high interest rates in most countries are in the two digit levels, and it makes it very difficult for consumers to have access to affordable financing,” added Zanamwe. “This creates a cycle where low demand prevents the economies of scale needed for local factories to produce affordable new vehicles.”

The situation is exacerbated by the practices of some international exporters. Research indicates used vehicles from markets like Japan and Singapore are often sold at very low prices or even written off and shipped abroad, making it impossible for locally manufactured units to compete on price alone.

In response, industry players are exploring innovative solutions. Volkswagen’s mobility solutions program in Rwanda was highlighted as a case study. By offering ride-hailing, car-sharing and subscription services, the model provides access to mobility without the need for a large upfront purchase, effectively addressing the affordability issue through a different business model.

Ultimately, African leaders argue a cohesive policy environment is crucial. This includes finalising the AfCFTA’s rules of origin for automotive products, harmonising standards and developing policies that support localisation while simultaneously creating mechanisms for affordable vehicle asset financing. The success of the continent’s automotive industrialisation depends on its ability to navigate the complex interplay between ambition, consumer reality, and economic policy.

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Naacam 2025: Strategies for Revitalizing South Africa's Automotive Industry

Against a backdrop of significant industry pressures, key government figures this week committed to tangible interventions aimed at securing the future of South Africa’s automotive components manufacturing sector.

Speaking at the opening of the 2025 National Association of Automotive Component and Allied Manufacturers (Naacam) Show, politicians outlined a multi-faceted approach designed to address immediate threats while positioning the industry for the new energy vehicle (NEV) era.

Nelson Mandela Bay Mayor, Babalwa Lobishe, set a local tone, emphasising the metro's commitment to sustaining existing manufacturers and attracting new investment to the region. Her remarks underscored the critical importance of the sector to the Eastern Cape economy, a point robustly expanded upon by Eastern Cape MEC for Economic Development, Environmental Affairs and Tourism, Nonkqubela Pieters.

MEC Pieters firmly established the province as the cornerstone of South Africa's automotive industry, responsible for exporting over half the country's manufactured vehicles. She pointed to the long-standing presence of major Original Equipment Manufacturers (OEMs) such as Isuzu, Volkswagen and Mercedes-Benz and welcomed the anticipated Stellantis production facility.

However, Pieters did not shy away from the challenges, explicitly citing increased import tariffs, persistent energy supply constraints, and logistical bottlenecks as direct threats to businesses and employment.

"Electricity supply remains the decisive factor in attracting and attaining investment," Pieters says, outlining provincial efforts to diversify the energy mix. These include proposed liquefied natural gas infrastructure development and the accelerated deployment of wind and solar projects.

Furthermore, she detailed plans to enhance freight capacity at the Gqeberha port, finalise a provincial hydrogen strategy, and collaborate with Technical and Vocational Education and Training (TVET) colleges and universities on skills development programmes tailored to the NEV transition.

The national perspective highlighted deeper systemic issues. Minister of Employment and Labour, Nomakhosazana Meth, framed global disruptions as potential opportunities for market diversification into Asia, Latin America and Africa. Yet, she starkly illustrated the sector's fragility by referencing the closure of ArcelorMittal's steel operations in Newcastle and Vereeniging.

"The direct impact is over 3,500 jobs lost in steel production," Meth noted, "with ripple effects across the automotive supply chain potentially pushing total job losses beyond 13 000 in the near term."

While acknowledging a R380-million government lifeline provided through InvestSA and the Industrial Development Corporation, Meth argued for proactive measures. She advocated for a comprehensive steel master plan, built on public-private collaboration, to secure buffer stocks, upgrade mini-mills for OEM-certified steel production, and address underlying competitiveness barriers like energy, logistics, and infrastructure.

To support the NEV shift, Meth confirmed the allocation of R1 billion in state funding aimed at catalysing R30 billion in private investment for local manufacturing projects.

Minister of Trade, Industry and Competition, Parks Tau, presented a sobering analysis of the domestic market. He contrasted 2024’s new vehicle sales of 515 712 units with the South African Automotive Master Plan (SAAM) 2035 target of exceeding 780 000 units. Tau highlighted concerning trends: 64% of vehicles sold domestically are imports, undermining local production, while local content in domestically produced vehicles remains static at 39%, significantly below the 60% SAAM 2035 goal. Compounding this, US tariffs now impact R28,7-billion worth of South African automotive exports.

"These pressures have directly contributed to 12 company closures and over 4 000 job losses within the past two years," Tau says, citing recent production suspensions at Mercedes-Benz and others as symptomatic of industrial value erosion. He stressed that a relatively modest 5% increase in local content could unlock R30 billion in new procurement, far outweighing the potential loss of the R4,4-billion US export market.

Tau detailed specific policy responses. Reforms to the Automotive Production Development Programme Phase 2 (APDP2) are underway, including shifting incentive structures to favour manufacturing over mere assembly.

A critical minerals and metals strategy will prioritise beneficiating platinum group metals, copper, and manganese for high-value NEV components like fuel cells and batteries. Significant tax incentives are also being deployed; the Taxation Laws Amendment Act gazetted in December 2024 introduces a 150% capital allowance for qualifying investments in EV and hydrogen vehicle production assets, applicable between March 2026 and March 2036.

On skills development, Tau confirmed collaborations with Tshwane University of Technology, Cape Peninsula University of Technology, and Unisa to develop new EV manufacturing curricula and certification programmes, culminating in a 100-student pilot project next year. He also reaffirmed commitment to transformation targets, including the SAAM 2035 goal of establishing 130 new black-owned manufacturers.

Addressing the broader investment climate, Tau announced plans for a general laws amendment bill designed to fast-track high-impact investments within 90 days, aiming to reduce red tape. A study via the International Trade Administration Commission (ITAC) will examine the impact of imports on local production.

"Our policy response prioritises offering the carrot, not wielding the stick," Tau concluded, "to attract investment and increase the value-add of our component manufacturers."

The collective message from Gqeberha was clear: the government recognises the severe headwinds facing the auto components sector, from energy instability and logistics failures to global market shifts and job losses.

The pledges made at Naacam 2025 represent a concerted, albeit complex, effort to stabilise the industry through infrastructure investment, policy reform, skills development, and targeted financial support, aiming to navigate the transition towards a more resilient and technologically advanced future. The success of these undertakings will be measured in the coming years by their ability to translate commitment into concrete results on factory floors and in export figures.

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