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.

https://bit.ly/3XZdwHv

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.

https://bit.ly/49HXvg9

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.

https://bit.ly/4o3gCWy

Volvo Trucks Launches Euro 6 Assembly in South Africa

Volvo Trucks South Africa is gearing up to assemble its latest Euro 6 trucks at their Durban plant starting in early 2026. This move puts their KwaZulu-Natal site at the forefront of commercial vehicle production in the area.

Mattias Rodier, CFO of Volvo Trucks South Africa’s, said this decision shows the company’s focus on both greener transport and supporting local manufacturing. He added it reinforces the commitment to giving South Africa cleaner, more efficient transport choices.

Mattias Rodier

The Euro 6 standard is a big step up from South Africa's current Euro 2 rules. To get ready, the Durban plant, which was updated in 2022 for Euro 5 production, has been upgraded again.

They've tweaked the assembly line for new parts like AdBlue tanks and special exhaust systems. Plus, they’re investing in team training to keep up product quality.

By assembling these trucks locally, Volvo Trucks can avoid import duties, potentially making these advanced models more affordable. Rodier explained that they’re listening to what their customers need. Building Euro 6 trucks in South Africa helps them meet the rising demand for cleaner tech while keeping prices competitive. The truck engines will come from Volvo’s factory in Skövde, Sweden, and will be shipped to Durban for assembly.

This new Euro 6 production will fit in with the current assembly of Volvo’s heavy-duty truck lines, like the FH, FM, and FMX, improving the plant's overall output.

The Volvo FH Euro 6, already available in South Africa with several horsepower options, is built for long-distance transport, a vital part of the country's economy. This truck is designed to be efficient, aiming to cut diesel use and lower ownership costs for fleet managers.

Volvo Trucks South Africa is also planning to bring in the FH Aero model soon. Currently being tested and approved for South Africa, this aerodynamic truck is viewed as a top choice for long-haul transport. The FH Aero, which won the 2025 Green Truck award in Germany, will come with both diesel and electric options.

Rodier is excited about the model, saying it’s Volvo’s most efficient truck yet as they work to lower CO2 emissions across their product line.

He describes it as a safe, aerodynamic, high-quality truck designed for tough long-haul jobs and customer success, and he looks forward to introducing it to the South African market. A launch date will be announced after testing and approvals are complete.

https://bit.ly/47KvVxY

Of Bakkies and Batteries: Is South Africa Watching the Rear-View Mirror as Morocco Overtakes?

There’s a palpable buzz around South Africa’s New Energy Vehicle (NEV) scene. The sales figures are undeniably exciting, more than doubling in a year. There’s talk of our famed grassroots innovation, the kind that brought the world the ‘Please Call Me’, poised to execute another stunning leapfrog.

Linda Cele from WesBank isn’t wrong when she says, “We have a proven history of solving for our unique local challenges.”

The organic demand, the growing charging network surpassing global density averages, and the stabilising grid all point to a market itching for ignition. It feels like the beginning of a great South African success story.

But while we’re meticulously charting our domestic course, a glance northwards reveals a competitor that isn’t just navigating—it’s building the highway. Morocco is not quietly positioning itself; it is thunderously declaring itself as the continent’s undisputed automotive powerhouse, and its ambitions are fundamentally different from ours. Where we see a promising market for adoption, they see a global factory for export.

The numbers are staggering. Morocco’s production is sprinting towards one million vehicles in 2025, a figure that will see it overtake Italy—a cornerstone of European automotive heritage. This isn’t happenstance. It is the result of a brutal and brilliant industrial strategy. They leveraged a trifecta of advantages we can only dream of: strategic location a stone’s throw from Europe, labour costs averaging a mere $106 per vehicle, and, most critically, aggressive policy designed to seduce global giants.

While our government touts a welcome but belated 150% tax incentive to attract manufacturers, Morocco’s government has already landed them, backed by billions in Chinese investment for entire EV battery supply chains.

They are not just assembling cars; they are building the ecosystem, from gigafactories to anode plants, capitalising on their own vast reserves of critical minerals like cobalt and phosphates. They have turned themselves into the most cost-efficient manufacturing hub on the planet, a magnet for companies like Hyundai looking to bypass Western tariffs and tap into European and American markets via free trade agreements.

So where does this leave South Africa? We risk becoming a fascinating case study of market potential hamstrung by industrial caution. Our 25% import tax on EVs—a full 7% higher than for internal combustion engines—is a paradox that perfectly encapsulates our lag. It protects a legacy industry while actively punishing the consumers driving the new one. We are celebrating organic demand that is succeeding in spite of policy, not because of it.

Our conversation, as Cele rightly points out, is about Total Cost of Ownership for fleet managers. Morocco’s conversation is about global supply chain dominance. Their growth is export-led, industrial, and strategically geopolitical. Ours remains, for now, inwardly focused on domestic consumption.

This is not to dismiss our progress. The surge in NEV sales is real and impressive. The potential of the African Continental Free Trade Area (AfCFTA) is a game-changer that South Africa is uniquely positioned to exploit. 

As Luthando Vuba of Standard Bank highlights, emerging hubs in Morocco, Nigeria, and Kenya are driving demand for South African components. Africa’s automotive sector is projected to grow to $33 billion by 2033, and we accounted for over 28% of it last year. This is our undeniable strength: deep manufacturing expertise and a formidable component sector.

But herein lies the critical divergence. Morocco is positioning itself as the continent’s factory floor; we risk remaining its premier parts shop. We have the chance to supply the components for the vehicles they are building at a phenomenal scale. It’s a valuable role, but is it ambitious enough? Are we content to feed the value chain, or do we want to own and control more of it?

The path forward requires a dual strategy. First, we must urgently address the domestic policy contradictions. Meaningful consumer incentives and a rationalisation of import duties are essential to accelerate local adoption and make our market attractive for local production.

Second, and more importantly, we must leverage AfCFTA with a ruthless, strategic focus. We may not be able to compete with Morocco’s labour costs, but we can outpace them with our depth of engineering skill, our sophisticated financial services, and our established component manufacturing base. We must become the brain and the nervous system for Africa’s automotive growth, supplying the high-value intellectual property, the sophisticated parts, and the EV technologies that every new assembly plant on the continent will need.

The race is on. Morocco is sprinting ahead in the manufacturing volume game. South Africa’s opportunity is to innovate and integrate at a higher level. We have the history of solving local challenges with unique solutions. Our next great challenge is not just to adopt the electric vehicle revolution, but to define Africa’s place within it—not just as a market, but as a master of its own industrial destiny. The journey is underway, but we must look up from our own dashboard to see who is already pulling ahead.

https://bit.ly/3UIz7CB

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.

https://bit.ly/41sLWov

Africa Automotive: Exploring Green Steel in South Africa - A Path to Sustainability

As global industries shift towards greener practices, South Africa is beginning to explore the potential of ‘green steel’—a low-carbon alternative to traditional steelmaking—with interest from both steel producers and automotive manufacturers. 

Image Supplied: ArcelorMittal

Green steel is produced using renewable energy and hydrogen instead of coal, significantly reducing carbon emissions. Given that steel production is a major contributor to global CO₂ emissions, the push for greener alternatives has gained momentum worldwide. In South Africa, where the steel and automotive sectors are key economic drivers, the transition could play a crucial role in maintaining competitiveness, especially as international markets impose stricter environmental regulations. 

Currently, no South African automakers are using green steel in large-scale production, but industry leaders are closely monitoring developments. Companies like Mercedes-Benz South Africa and BMW Group South Africa have committed to sustainability goals, including carbon-neutral manufacturing, which could eventually incorporate green steel. 

Image supplied: ArcelorMittal

On the production side, ArcelorMittal South Africa, the country’s largest steelmaker, has signalled interest in decarbonisation. The company has partnered with renewable energy providers and is exploring hydrogen-based steelmaking, though full-scale green steel production is not yet a reality. Similarly, South Africa’s Industrial Development Corporation (IDC) has highlighted green steel as a priority for future investment, aligning with global trends towards sustainable industrial processes. 

Experts suggest South Africa, with its abundant solar and wind resources, is well-positioned to produce green hydrogen, a key component in green steel manufacturing. However, high costs and infrastructure challenges remain barriers to rapid adoption. 

The transition to green steel is inevitable, but it will require significant investment and policy support but for South Africa to remain a player in global automotive and steel markets, it must accelerate its shift towards sustainable production methods.

While the local industry is still in the early stages, the global push for decarbonisation means green steel could soon become a critical factor in South Africa’s industrial future. For now, automakers and steel producers are watching closely, preparing for a greener transition. 

https://bit.ly/4odFyej

Continental Auto Industry Gathers Momentum Amidst Trade Push, SA Exports Hold Steady

Johannesburg, a historical nexus of commerce and ambition, recently hosted pivotal discussions framing Africa’s automotive future. The gathering served as a precursor to the Africa Automotive Show, integrated within the larger Intra-African Trade Fair (IATF2025), scheduled for Algiers, Algeria, between 4 and 10 September 2025. 

This event is positioned as a critical driver for continental economic integration under the African Continental Free Trade Area (AfCFTA), even as specific challenges, including the noted closure of South Africa's Goodyear tyre factory, underscore persistent hurdles. 

Representatives from the African Export-Import Bank (Afreximbank) and the South African government emphasised the urgent need to translate policy into tangible trade. Afreximbank executives highlighted a fundamental barrier: not tariffs or logistics, but a deficit in actionable market intelligence. 

Illustrative cases were stark: Tunisia, Morocco, and South Africa collectively import over $400 million in leather goods annually from outside Africa, despite significant production capacity in Ethiopia, Kenya, and Sudan. Similarly, West African nations spend upwards of $3 billion importing meat from distant markets like Argentina and Australia, overlooking potential suppliers including Mali, Namibia, Chad, Sudan, Botswana, South Africa, and Zambia. 

"This isn't about capacity," Humphrey Nwogo, Regional Director, Southern Africa for Afreximbankl stressed. "The problem is connectivity. The problem is lack of information." 

These imbalances represent missed chances for job creation, value addition, and economic diversification continent-wide. Assembly operations at the Toyota plant in Prospecton, Durban 

The IATF, now formally designated by the African Union (AU) as the AfCFTA's commercial face and integrated into its framework, is seen as the strategic tool to bridge this gap. Its relevance was affirmed at the 2024 AU Summit, where heads of state acknowledged its role in facilitating cross-border agreements. 

South African Context: 

Exports and ImperativesAgainst this backdrop, South Africa's role in the continental vehicle manufacturing landscape remains significant. According to the latest figures from naamsa | The Automotive Business Council, the country produced approximately 515 000 vehicles during 2024. Combined with substantial output from North African nations, primarily Morocco and Egypt, total continental production reached an estimated 1,2-million units. 

This starkly contrasts with minimal output from West, Central, and East Africa, highlighting significant growth potential. 

"These figures demonstrate the existing industrial base concentrated in the north and south," says Nwogo. "The potential for replication and expansion into other African regions is immense. 

Achieving a continental output target of 5-million units is a feasible ambition underpinned by the AfCFTA." 

However, South African officials acknowledged hurdles hindering deeper integration. Deputy Minister of Public Works and Infrastructure, Sihle Zikalala, pointed to logistics constraints and skills gaps impacting cost-competitiveness for South African exports elsewhere in Africa. 

He cited the example of a Tunisian colleague driving a vehicle manufactured in Thailand rather than South Africa. "That’s why we are in this room," Zikalala remarked, underscoring the need for the AfCFTA to address these frictions. 

Beyond Assembly: The Skills Imperative

The discussion extended beyond mere vehicle assembly to encompass the entire value chain and skills ecosystem. Industry experts emphasised that sustainable growth requires equipping markets with the technical and soft skills needed to service and maintain vehicles post-sale. 

The African Association of Automotive Manufacturers (AAAM) highlighted its Skills Development Working Group, focusing on building capacity from artisan levels to policy-making echelons. Initiatives include executive short courses for trade officials and practical exposure within manufacturing plants, aiming to foster informed policy development and local job creation alongside industrialisation.  

Kenya Positions for AfCFTA Gains

Echoing the continent-wide focus, Kenya used its own IATF2025 roadshow to position itself as a trade, industrial, and innovation hub. Cabinet Secretary for Investments, Trade and Industry, Hon. Lee Kinyanjui, stated, "The solutions to Africa’s problems lie with Africans. It is essential for countries within the continent to strengthen intra-African trade... 

With a well-educated population, abundant resources, and banks ready to finance investment, Africa has what it takes to elevate itself to the next level." Afreximbank's Executive Vice President, Haytham Elmaayergi, reiterated the information gap challenge at the Kenyan event, using the leather import example, and spotlighted Kenya’s digital innovation sector as having significant export potential under the AfCFTA. 

As nations prepare for Algiers 2025, the focus remains on harnessing regional value chains, accelerating industrialisation, and overcoming informational and infrastructural barriers. The Africa Automotive Show within the IATF stands as a pivotal marketplace and catalyst for converting the AfCFTA's promise into tangible commercial progress across the continent, with South Africa's established export capacity poised to play a key role amidst ongoing domestic challenges. https://bit.ly/4l644vI

Goodyear Closes South Africa Plant: Economic Impact Explained

The announcement that Goodyear, one of the world’s largest tyre manufacturers, will shut down its South African plant in Kariega, Eastern Cape, marks another significant blow to the country’s struggling manufacturing sector. 

The closure will result in the loss of approximately 750 direct jobs, with a ripple effect likely to impact thousands more in the surrounding economy. This decision follows a troubling trend of multinational companies scaling back operations in South Africa, raising questions about the broader economic climate and the role of policies such as Broad-Based Black Economic Empowerment (B-BBEE) in shaping corporate investment decisions.   

Goodyear’s exit is part of a broader global restructuring strategy aimed at cutting costs and improving efficiency. The company has faced mounting financial pressures, including rising raw material costs, supply chain disruptions and declining demand in certain markets. 

In a statement, Goodyear cited the need to optimise its manufacturing footprint, with the South African plant deemed no longer viable in the long term.   

However, while global factors played a role, local challenges have also contributed to the decision. South Africa’s manufacturing sector has been under strain for years due to persistent electricity shortages, logistical bottlenecks at ports and railways and rising operational costs. 

These issues have made it increasingly difficult for manufacturers to remain competitive, particularly when exporting to international markets.   

The immediate impact of Goodyear’s closure will be felt most acutely by its employees and their families. The Uitenhage plant has been a major employer in the Eastern Cape since the 1930s, providing stable, skilled jobs in a region with high unemployment. 

The loss of 750 direct jobs will have a cascading effect on suppliers, service providers and small businesses that rely on the plant’s operations.   

For many workers, finding alternative employment will be difficult. South Africa’s official unemployment rate stands at around 32%, with youth unemployment even higher. The Eastern Cape, in particular, has struggled with economic stagnation, meaning that retrenched employees may face prolonged joblessness or be forced to relocate. 

The social consequences—increased poverty, household instability, and reduced spending in the local economy—will likely be severe.   

While not the sole reason for Goodyear’s departure, South Africa’s B-BBEE policies have been cited as a contributing factor in disinvestment decisions. B-BBEE regulations are designed to redress historical economic inequalities by encouraging black ownership, management representation and procurement from black-owned businesses. 

While the intentions are commendable, some analysts argue the compliance burden and associated costs have made the country less attractive to multinational corporations.   Companies operating in South Africa must meet strict B-BBEE scorecard requirements, which can involve significant expenditure on transformation initiatives, skills development and supplier diversification. For firms already grappling with low profitability, these additional costs can tip the scales in favour of relocating to more business-friendly environments.   

This is not the first time B-BBEE has been linked to corporate exits. In 2023, Nissan South Africa announced a review of its Rosslyn plant’s future, sparking fears of a potential closure. 

Though no final decision has been made, industry insiders suggest regulatory pressures, along with other economic challenges, are being weighed in the assessment. 

Similarly, other multinationals, such as Murray & Roberts and Sasol, have scaled back local operations in recent years, citing difficult operating conditions.   

Goodyear’s exit fits into a concerning pattern of multinational companies reassessing their South African operations. In 2022, P&G closed its Johannesburg manufacturing plant, shifting production to other African countries. These departures suggest a growing reluctance among global firms to maintain a manufacturing presence in the country.   

The reasons for disinvestment are multifaceted, but common themes emerge: unreliable infrastructure, policy uncertainty, and high costs of doing business. While B-BBEE is not the primary driver, it adds another layer of complexity for companies already dealing with power cuts, port delays, and sluggish economic growth.   

To stem the tide of disinvestment, South Africa needs urgent reforms to improve the business environment. Stabilising electricity supply, fixing Transnet’s rail and port inefficiencies and reducing bureaucratic red tape should be top priorities. At the same time, policymakers may need to reassess how B-BBEE is implemented to ensure it does not inadvertently deter investment.   

Some experts suggest a more flexible approach, where compliance requirements are balanced against the need to retain jobs and industrial capacity. Engaging with multinational companies to understand their concerns, rather than imposing rigid regulations, could help strike a better balance between transformation and economic growth.   

Goodyear’s departure from South Africa is a symptom of deeper structural problems in the economy. While global restructuring played a role, local challenges—including energy shortages, logistical failures and regulatory pressures—have made the country a less competitive manufacturing hub. The closure will devastate workers and the Kariega community, highlighting the urgent need for policy interventions that encourage investment rather than drive it away.   

I

f South Africa fails to address these issues, more multinational exits are likely, further eroding the country’s industrial base and worsening unemployment. The time for decisive action is now—before more factories follow Goodyear out the door. https://bit.ly/3ZT4zAU

Africa Automotive - How Policy and Partnership Are Igniting Africa’s Automotive Revolution

In the heart of Botswana’s Lobatse, a quiet industrial revolution is unfolding. Inside Delta Automotive Technologies’ sprawling factory, skilled hands weave intricate webs of wires and connectors — components destined for Volkswagen and Nissan vehicles across Africa.

Intricate wiring harness assembly in Lobatse, Botswana

This facility, powered by strategic financing and regional collaboration, embodies a transformative vision: Africa as a hub of automotive innovation, not just a market for second-hand imports. But to shift gears from potential to reality, the continent’s governments must accelerate policies that fuel local manufacturing, cross-border trade, and sustainable mobility.

The Road So Far

Africa’s automotive sector sits at a crossroads. In 2024, Sub-Saharan Africa (excluding South Africa) saw just 175 915 new vehicle sales, overshadowed by over a million used imports. Countries like Ghana, Nigeria, and Rwanda remain tethered to ageing fleets, often a decade old, which guzzle fuel, pollute cities and drain foreign exchange. Vehicle penetration lingers at three cars per 100 people — a stark contrast to the global average of 18. Yet, this gap signals untapped opportunity.

“We’re scratching the surface,” says Martina Biene, Chairperson of Volkswagen Group Africa. “But unlocking this potential demands policy alignment, investment in clean energy, and a continent-wide rethink of how we approach mobility.”

Policy as the Engine of Growth

Victoria Backhaus-Jerling

At a recent Volkswagen-hosted event in Kigali, Victoria Backhaus-Jerling, CEO of the African Association of Automotive Manufacturers (AAAM), outlined the non-negotiables for progress. “Political will to implement automotive policies is paramount,” she asserted. “Without legal frameworks, Original Equipment Manufacturers (OEMs) won’t invest.”

Her message resonates across boardrooms and government offices: Africa needs cohesive policies to attract giants like Toyota, Volkswagen, and Renault. South Africa, Morocco, and Tunisia have already demonstrated this. South Africa’s auto sector contributes 4,3% to GDP, supported by incentives like the Automotive Production and Development Programme.

Morocco, now Africa’s top car exporter, leveraged tax breaks and port upgrades to lure Renault and Stellantis. Algeria, too, is drafting an auto policy to position itself as a manufacturing contender.

Filter assembly at Johannesburg's Mann & Hummel facility

But fragmentation persists. Forty-one African countries lack basic automotive standards, from fuel quality to emissions. Ghana’s nascent assembly incentives — tax breaks for local plants — are hamstrung by uneven regional regulations. Backhaus-Jerling’s solution? “One Africa, one automotive standard. Harmonisation reduces costs and builds value chains that stretch from Accra to Addis Ababa.”

AfCFTA: The Continental Catalyst

The African Continental Free Trade Area (AfCFTA) could be the game-changer. Its proposed Rules of Origin (RoO), requiring vehicles to contain 40% local content for tariff-free trade, might reshape supply chains. For Ghana, this could mean component manufacturing booms; for South Africa, expanded markets for its OEMs. Regional collaboration is already budding. Botswana’s Delta Automotive supplies wiring harnesses to South African plants, a synergy Backhaus-Jerling calls “a blueprint for cross-border industrialisation.”

Yet AfCFTA’s success hinges on execution. “It’s not just about agreements,” says Biene. “It’s about ports that clear goods swiftly, roads that connect factories, and grids that support electric vehicle (EV) charging.”

Botswana’s Delta

Delta Automotive Technologies exemplifies this potential. Founded with an $80-million African Development Bank (AfDB) credit line, the company now produces 120 wiring harnesses daily for Volkswagen’s Polo Vivo and Nissan’s H60 models. By 2027, it aims to triple output, employing 1 000 workers — 95% Batswana nationals.

“This isn’t just manufacturing; it’s opportunity,” says Delta’s Director of Manufacturing, Darryn Hattingh. The factory’s impact ripples beyond Lobatse: rural communities gain skilled jobs, women shatter industry stereotypes (75% of Delta’s workforce is female), and Botswana diversifies beyond diamonds.

Clara Kaekane, a Delta engineer, embodies this shift. “We’re challenging perceptions,” she says. “Every harness we build proves women belong in engineering and Africa belongs in global supply chains.”

The EV Opportunity

As the world pivots to electric mobility, Africa can’t afford to lag. Kenya’s electric motorbike boom and Morocco’s EV exports hint at a greener future. Ghana, with its renewable energy mix, is poised to lead in battery assembly and EV production. Initiatives like Volkswagen’s GenFarm — electric tractors deployed in Rwanda — show how local solutions can address global challenges.

But EVs require more than innovation. “Africa needs infrastructure—charging stations, reliable power, and skilled technicians,” notes Biene. Ghana’s planned technical institutes, focusing on EV tech, could become regional talent hubs.

From left, Teddy Mugabo, CEO: Greenfund Rwanda, Michael Frambourg, Executive Manager: Sustainability Solutions, Volkswagen Group Innovation Centre Europe, Martina Biene, Chairperson & Managing Director: Volkswagen Group Africa, Dr Ron Rosati, Vice Chancellor: RICA, Dr Telesphore Ndabamenye, Director General: Rwanda Agriculture Board, Serge Kamuhinda, CEO: Volkswagen Mobility Solutions Rwanda, Hildegard Muller, President: VDA.

The Used Car Conundrum

Grappling with used imports remains thorny. In Ghana, 70% of vehicles are second-hand, often evading emissions standards. Banning them risks public backlash, but gradual reforms — stricter age limits, low-interest loans for new cars — could tilt the balance. Kenya’s 2018 age limit (eight years for imports) offers a model, though enforcement is patchy.

Financing the Future

Development finance institutions like AfDB are critical. Their investment in Delta Automotive unlocked $23-million in exports and positioned Botswana as a component supplier. “This is how you industrialise Africa,” says AfDB’s Moono Mupotola. “Connect communities to global value chains.”

Yet private-sector partnerships are equally vital. Volkswagen’s collaboration with Ghana’s Universal Motors to assemble Tiguan SUVs shows how OEMs can seed local industries.

Africa’s automotive journey isn’t about catching up — it’s about redefining mobility on its own terms. From Algeria’s emerging factories to South Africa’s OEM hubs, the pieces are falling into place. But without political drive, even the best policies stall.

As Backhaus-Jerling puts it, “Africa has the market, the youth, and the resources. Now, we need the will to build an industry that doesn’t just assemble cars but engineers solutions for the world.”

In Lobatse, that future is already taking shape. With every wire harness Delta’s workers craft, they’re weaving a new narrative — one where Africa isn’t just open for business but is building the vehicles that will drive it forward.

https://bit.ly/3Zr0nYO

Africa Automotive: Transforming Africa's Automotive Industry - Key Regulatory Challenges

Africa’s automotive industry stands at a crossroads, balancing untapped potential against systemic challenges. The African Association of Automobile Manufacturers (AAAM) has intensified calls for governments to accelerate the adoption of unified automotive regulations, a move seen as critical to unlocking regional economic growth and integration.

With 41 of the continent’s 54 nations lacking standardised fuel quality controls or vehicle manufacturing frameworks, industry leaders argue that fragmented policies are stifling investment and hindering cross-border collaboration.

Speaking at a recent industry briefing in Kigali, AAAM CEO Victoria Backhaus-Jerling underscored the urgency of aligning national regulations with global benchmarks. “Harmonising standards for vehicles, components, and fuel is not merely beneficial—it is foundational,” she stated. “Without cohesive policies, Africa risks missing opportunities to transform raw materials into higher-value products and build resilient regional supply chains.”

Her remarks highlight a pressing dilemma: while not every country needs vehicle assembly lines, coordinated standards could enable nations to leverage comparative advantages, fostering specialisation and shared industrial growth.

Volkswagen plant in Kariega, South Africa

Policy Gaps and Economic Costs

The absence of regulatory alignment has tangible consequences. Volkswagen Group Africa’s Managing Director, Martina Biene, pointed to Nigeria as an example, where inconsistent fuel quality standards disrupted the company’s operations and delayed market re-entry. Such barriers, she noted, undermine Africa’s ability to attract manufacturing investments, despite its burgeoning consumer markets and raw material reserves.

The automotive sector’s economic significance is well-documented. In South Africa, it contributes 4.3% to GDP and supports over 450,000 jobs, trailing only mining in economic impact. Yet, across much of the continent, disjointed policies mean similar benefits remain unrealised. Backhaus-Jerling emphasised that political continuity is key: “Sustainable industrial growth requires commitment beyond electoral cycles. Policy formulation cannot halt with changes in leadership.”

Regional Integration and the AfCFTA Imperative

The African Continental Free Trade Area (AfCFTA), operational since 2021, offers a pathway to address these challenges. By reducing intra-African tariffs and streamlining customs procedures, the agreement aims to create a unified market of 1.3 billion people. For automakers, this could catalyse economies of scale, making local production more viable. However, progress hinges on complementary national policies.

“Regional integration must be prioritised,” urged Backhaus-Jerling. “Policies that facilitate cross-border trade and value-chain collaboration are essential to position Africa within global automotive networks.” The AAAM advocates for frameworks that incentivise domestic manufacturing, reduce reliance on imported vehicles, and attract foreign direct investment (FDI). Countries like Morocco and Egypt, which have implemented targeted automotive strategies, serve as models, drawing major manufacturers through tax incentives and infrastructure development.

Ford's PHEV battery assembly plant in Rosslyn, Pretoria

Trade Turbulence and the US Tariff Threat

While continental integration advances, external pressures loom. South Africa’s export-driven automotive sector faces uncertainty due to proposed US tariffs. Former President Donald Trump’s 2024 announcement of 25% levies on automotive imports, coupled with an additional 31% duty targeting South Africa, threatens to disrupt a trade relationship underpinned by the African Growth and Opportunity Act (AGOA). Since 2001, AGOA has granted duty-free access to the US market for eligible African nations, with South African automotive exports — including brands such as BMW , Ford and Toyota — accounting for 64% of AGOA-related shipments.

Though only 6,5% of South Africa’s automotive exports currently go to the US, industry representatives caution against underestimating the tariffs’ ripple effects.

Complicating negotiations is South Africa’s recent foreign policy stance, including its International Court of Justice case accusing Israel of genocide in Gaza — a move criticised by US lawmakers. With trade discussions likely to intersect with geopolitical tensions, industry stakeholders emphasise the importance of safeguarding jobs without compromising national sovereignty.

Market Shifts: The Rise of Asian Manufacturers

BAIC assembly facility in Coega, Eastern Cape

Amid policy debates, Africa’s automotive landscape is undergoing a quiet transformation. Asian manufacturers, particularly from China, are gaining ground in markets traditionally dominated by European and American brands. In South Africa, Chinese automakers such as GWM (Haval) and Chery have doubled their market share since 2020, challenging incumbents through competitive pricing and local assembly investments.

China’s influence extends beyond finished vehicles. In 2021, 64% of South Africa’s imported aftermarket parts originated from China, reflecting deepening supply-chain integration. Companies such as BAIC and Yanfeng Plastic Omnium have committed billions to local production facilities, while established players including Toyota are partnering with Asian suppliers to reduce costs. This shift is reshaping manufacturing strategies, with Original Equipment Manufacturers (OEMs) increasingly sourcing components from Asian partners to maintain competitiveness.

Government’s Role in Navigating Transition

Industry leaders argue that targeted government support is vital to harness these trends. South Africa’s Automotive Investment Scheme (AIS), which co-funds manufacturing upgrades, and initiatives by the National Association of Automotive Component and Allied Manufacturers (NAACAM) to bolster local suppliers, exemplify measures that could be replicated continent-wide.

Transitioning to electric vehicles (EVs) presents another opportunity. With global OEMs pivoting to electrification, African nations could leverage mineral resources like cobalt and lithium to develop EV value chains. However, this requires proactive policy-making, including investment in charging infrastructure and incentives for local battery production.

A Roadmap for the Future

Toyota's manufacturing base is in Prospecton, Durban

The AAAM’s push for regulatory harmonisation coincides with a pivotal moment for African industry. As global trade dynamics shift and regional integration gains momentum, coordinated policies could unlock manufacturing potential, stimulate job creation, and reduce dependency on imports. For policymakers, the challenge lies in balancing immediate economic pressures with long-term strategic vision.

For automotive stakeholders, the message is clear: Africa’s success hinges on collaboration. By aligning standards, fostering specialisation, and prioritising regional value chains, the continent could transition from a patchwork of isolated markets into a cohesive automotive hub—one capable of competing on the global stage. The road ahead is complex, but with concerted effort, the rewards could be transformative.

https://bit.ly/4mfIfLF

US Tariff Impact on South African Automotive Industry

The recent announcement of a 30% tariff by the United States on goods imported from South Africa has created significant concern within the global motoring industry. This substantial increase in tariffs is expected to have far-reaching implications for South African car manufacturers, exporters, and the broader economy. The auto industry is now preparing for the substantial adjustments that this policy shift will necessitate.

Key stakeholders are paying close attention to how these changes will play out, as the new tariff introduces a host of challenges for South Africa's automotive sector, impacting everything from production costs to market competitiveness.

South Africa's automotive exports to the United States have been a crucial component of the country's export portfolio. In fact, the export of vehicles and parts from South Africa to the US is valued at over $2-billion. The introduction of the tariff is poised to disrupt this flow significantly. Notably, automobile exports accounted for 64% of South Africa's exports under the US African Growth and Opportunity Act (AGOA) in 2024. With such a substantial reliance on the American market, the potential impact of the tariff cannot be underestimated.

Industry experts and economists are weighing in on the situation. Some predict a decrease in South African vehicle exports to the US, which could lead to surplus inventory and financial losses for manufacturers. Additionally, South African cars could become less competitive in the US market due to increased costs, further exacerbating the situation.

No 'tariffs' on our fine selection of pre-owned vehicles - click here

The new tariff brings numerous difficulties for South African car manufacturers. An immediate concern is the rise in production costs, which stems from higher expenses for raw materials and components. This escalation in costs could lead to increased vehicle prices, potentially dampening demand in both domestic and international markets.

Manufacturers might need to reconsider their production strategies to stay competitive. This could include relocating manufacturing to countries with more favorable trade terms or investing in technologies that cut costs. However, such shifts require significant time and resources, adding to the industry's existing challenges.

Additionally, the uncertainty surrounding international trade relations could make it harder for manufacturers to plan for the future. The industry may face financial strain and operational disruptions as it navigates these complex issues.

Effects on the South African Economy

The broader South African economy is poised to experience significant repercussions due to the new US tariff. The automotive industry is not only a major contributor to South Africa's GDP but also a substantial employer, so a decline in exports could trigger widespread economic consequences. Potential job losses in the auto industry are a serious concern, as reduced production and export volumes may compel manufacturers to downsize their workforce.

Related Content: Losing AGOA would be a blow

Starting or running a small business and in need of a bakkie – click here

Additionally, the uncertainty surrounding trade relations with the US might dampen investor confidence in South Africa's automotive sector. This could lead to reduced investment, stalling the industry's growth and innovation. Companies may also face increased financial strain, making it harder to maintain operations and fund new projects.

The knock-on effects could extend to related industries, such as suppliers and logistics providers, amplifying the economic impact. Overall, the new tariff introduces a layer of complexity that the South African economy will need to navigate carefully, affecting everything from employment rates to future investment opportunities.

Responses from Industry Stakeholders

Industry stakeholders are actively addressing the tariff announcement, with varied reactions across the sector. Renai Moothilal, CEO of the National Association of Automotive Component and Allied Manufacturers, emphasized the need for more details, stating that the association will await further information on the specific components affected by the tariff proclamation.

Government officials and industry leaders are expected to pursue diplomatic discussions to negotiate the tariff's terms with the US, aiming for potential exemptions or revisions. Some stakeholders are urging the South African government to strengthen trade agreements with other countries to offset the impact of the US tariff.

There is also a call for increased investment in domestic technologies and alternative markets to reduce dependency on US exports. This multi-pronged approach could help mitigate some of the tariff's adverse effects on the South African automotive sector.

Chairperson of the federal council of the Democratic Alliance (DA), Helen Zille says the global tariffs unleashed by US President Donald Trump spell disaster for South Africa, amid the souring bilateral relationship.

“What can one say? It is going to be disastrous for our automotive industry in particular if they have 30%  tariffs slapped on our motor vehicles that are made in the facilities of Pretoria and Nelson Mandela Bay. Obviously, it is going to be terrible for us,” she said.

“The government won't learn. There is tension between the ANC and just about every democracy in the world, and there is certainly profound tension between the ANC and democrats in South Africa.”

Need finance – click here for the very best finance deals for your new car

In the long run, South African car manufacturers will need to rethink their strategies to adapt to the new trade environment. They might start exploring untapped markets and diversifying their export destinations to reduce their reliance on the US This could involve strengthening trade relations with other countries and regions, potentially opening new avenues for growth. 

Additionally, investing in advanced manufacturing technologies and improving efficiencies could help mitigate the increased production costs imposed by the tariff. Collaborations with local and international partners could further enhance competitiveness and innovation within the industry. The South African auto industry's ability to navigate these changes will significantly influence its future trajectory.

The 30% US tariff on South African goods presents substantial challenges for the nation's automotive sector. The immediate consequences include a rise in production costs and potential job reductions, putting significant pressure on manufacturers to adapt swiftly.

Over the long term, the industry will likely need to diversify its export markets to lessen dependence on the American market. This shift could open new opportunities but will also require strategic investments in technology and efficiency improvements.

Stakeholders, including government officials and industry leaders, are working on responses to mitigate these impacts. Efforts are underway to negotiate better trade terms with the US and strengthen trade agreements with other countries. Additionally, there's a push for increased investment in domestic capabilities to reduce external dependencies.

The resilience of South African car manufacturers will be critical in navigating these changes. By exploring new markets and investing in advanced manufacturing technologies, the industry can adapt to the evolving trade landscape. While the road ahead is fraught with challenges, the potential for innovation and growth remains. The South African automotive sector's ability to pivot and respond strategically to these new conditions will significantly influence its long-term success and stability.

Colin Windell for Colin-on-Cars in association with

proudly CHANGECARS

https://bit.ly/4iUnbIh