South Africa could lose its position as Africa’s dominant vehicle producer and consumption market, was the warning by executives at the Naamsa Autoweek conference in Gqeberha’s Coega industrial zone this week.
They said stagnation would lead to South Africa being overtaken by continental peers that are ramping up industrialisation efforts.
"We are concerned to notice Morocco’s ambitions to manufacture 1-million vehicles in 2025, which was our stated objective under the South African automotive masterplan 2035," said Neale Hill, president of Ford Southern Africa.
Morocco recently attracted a $5.6bn (R96.5bn) investment from China to build an EV factory, while Egypt and Kenya had invested R1bn and R15bn, respectively, to establish tyre manufacturing plants, he said.
Goodbye Goodyear
In contrast, Hill said, Goodyear has closed its tyre plant in South Africa after 78 years, leaving 900 workers in Kariega unemployed.
Moreover, he added, the new energy vehicle (NEV) roadmap was not moving despite promises from President Cyril Ramaphosa.
"Consider a country like Ethiopia, which has over 100,000 EVs on its roads, versus just over 4,000 in SA — a turnaround requires urgency and deliberate action in a short space of time."
Gqeberha is home to manufacturers such as VW, Mercedes-Benz, Isuzu and Ford, as well as an extensive component manufacturing supply chain.
Naamsa president and Isuzu SA CEO Billy Tom said service delivery remained a major impediment to the vehicle industry’s growth.
"At municipal level we battle to get officials to understand challenges. For instance, down the road that runs 1km from this venue we have a vehicle storage facility — the traffic light never works and I worry about accidents," he said.
"We had to physically connect electricity to our premises to ensure the traffic lights work."
Tom said the first half of 2025 was an indication of the resilience of South Africa’s vehicle market, which registered a 3% increase in exports despite the loss of 25,000 units as a result of tariffs imposed by US President Donald Trump.
The Mercedes-Benz plant in East London was hit especially hard by the tariffs because the US market is a vital destination for its sole product, the C-Class.
Abey Kgotle, the newly-appointed co-CEO of Mercedes-Benz, said the company continues to evaluate its options, but no decision has been made regarding the facility, which has been in operation since 1958.
BMW SA CEO Peter van Binsbergen said South Africa now accounts for more than half of the continent’s automotive output, with Germany, the UK and France being the top three destinations for exports.
With the EU and UK market bans on internal combustion engine (ICE) vehicles nearing, Van Binsbergen believes Africa has the potential to become an important player in the global EV value chain due to its abundance of mineral resources.
Thato Magasa, CEO of Mitsubishi and Tata, under the Motus banner, said buyers of new cars in South Africa were overwhelmed by choice — there are as many as 50 passenger brands and more than 2,200 model derivatives available.
Toyota SA CEO Andrew Kirby called for a revision of the taxes applying to cars built locally to stimulate the market and stave off cheaper Chinese contenders.
Potential to grow
"An ad valorem luxury tax made sense in 1995, but we are now taxing lower-end vehicles as if they were premium products," he said.
Kirby believes the domestic market for new vehicles, which records annual sales of just under 600,000 units, has the potential to exceed 700,000 units.
"A big gap lies in local supply. In 2024 we talked about 412,000 locally-produced vehicles – we achieved a fraction of that, just 180,000 units."
Kirby said 2024’s export performance was remarkable under the circumstances, coming in at 387,000 units, close to the prediction of 432,000.
Still, he said the motor industry needed to diversify exports beyond the EU and UK.
"We don’t want to be relegated to being a conventional ICE manufacturing base; it might be fine for the next five years, but it will prove disastrous in the coming decade."
Numsa general secretary Irvin Jim called on the government to protect the domestic market, and blasted China for the flood of cheaper components and vehicles.
He said that in 2018 Chinese and Indian imports accounted for less than 1% of the market, a figure that has since risen to 26%.
"We need to claw back the market, foreign brands must set up plants in South Africa and localise.
"Local content in vehicle production is going backwards; to date over 12 component plants have shut down."
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