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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