South Africa: Automotive Industry Faces Challenges Amid Low Local Sales and Rising Imports

Edited By: Safae Fathi

South Africa’s automotive industry faces mounting pressure as low domestic sales, a surge in imports, and stagnant local content have contributed to the closure of 12 companies and the loss of over 4,000 jobs in the past two years, Trade Minister Parks Tau reported. The country, long dominated by international brands such as Volkswagen, Toyota, and Mercedes-Benz, recorded 515,850 locally produced car sales last year, falling short of the South Africa Automotive Masterplan 2035 target of 784,509 vehicles. Imports account for approximately 64% of the market, while local content – encompassing domestic assembly, labor, and components – remains at 39%, significantly below the 60% goal. In addition, U.S. tariffs on automotive products, imposed last year, have adversely affected the country’s $1.64 billion exports.

The minister highlighted that the sector directly employs 115,000 individuals, with over 80,000 working in component manufacturing alone. Industry experts warn that the ongoing tariffs threaten contracts with American buyers, placing jobs at risk. In response, South Africa has submitted a revised trade proposal to Washington aiming to reduce the 30% tariff. To bolster local production, incentive schemes now include electric vehicles and related components, emphasizing that even a modest 5% increase in local content could unlock 30 billion rand in procurement, far exceeding the 4.4 billion rand U.S. export market.

International manufacturers are exploring local production opportunities to support South Africa’s automotive growth. Companies such as Stellantis and China’s Chery have expressed plans to expand operations domestically, with Stellantis preparing to establish a new facility in the Eastern Cape province. Policymakers and industry leaders continue to advocate for greater localisation as a strategic priority, balancing economic growth, job creation, and the development of a sustainable automotive sector capable of meeting both domestic and international demand.