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Motorway between fields

South Africa: Overcoming challenges

4 Aug 2025

The automotive industry is one of the most important economic sectors in South Africa. However, while production figures remain solid, the industry is facing enormous challenges, ranging from structural problems within the country to global shifts in automotive technology.

Reading time: 5 minutes

South Africa’s strong automotive industry

Graphic: Locations and volumes of manufacturers

South Africa has the most industrialised economy on the African continent. With a gross domestic product (GDP) of around 373 billion US dollars in 2023, the country consistently ranks at the top in terms of economic performance in all of Africa. Despite growing socioeconomic challenges, including high unemployment and structural bottlenecks in energy supply, the automotive industry remains a stable backbone of the South African economy. It contributes around five to six percent to the GDP, making it one of the country’s most important industries. Not only does this sector generate foreign exchange earnings through exports, it also secures over 100,000 jobs in areas such as vehicle assembly, supplier companies, and trade. The strong integration into global production chains and the presence of major international manufacturers makes the South African automotive industry a key strategic  sector in the economy.

Cars for the world

Graphic: Exports South Africa

In 2024, South Africa produced around 515,850 vehicles. While this makes the country the largest automotive market on the African continent, it also saw a three percent decline compared to 2023. “Infrastructural problems and continued weak economic growth are putting pressure on consumer purchasing power. In addition, high borrowing costs are deterring potential buyers, which affects the sales of higher-priced models in particular,” says Jenny Tala, Southern Africa Director at Germany Trade & Invest (GTAI) in Johannesburg. It is also noteworthy that around 64 per cent of all vehicles manufactured in South Africa are exported to international markets. The most important buyer countries are Germany, the United Kingdom, Australia, and Japan — all of which are industrialised countries with high quality requirements. Key production facilities include the Toyota plant in Durban, the Volkswagen plant in Uitenhage, the Mercedes-Benz plant in East London, the Ford plant in Pretoria, and the BMW plant in Rosslyn. Some of these locations play a special role: for instance, the BMW plant in Rosslyn exclusively produces X3s for export.

“While European manufacturers have traditionally had a strong presence in South Africa and have factories here, low-cost imported models from China are increasingly flooding the market.”

Jenny Tala

On South Africa’s roads

Graphic: Demand for different car models

The South African automotive market remains relatively stable alongside industrial production. Around 532,000 new vehicles were sold in the country in 2023. Toyota once again emerged as the market leader with a share of around 25 per cent, followed by Volkswagen at around 18 per cent and Suzuki at around 12 per cent. The sales figures also reflect the preferences of South African consumers: the best-selling model was the Toyota Hilux, followed by the Ford Ranger and the Volkswagen Polo Vivo. These vehicles combine sturdiness with everyday practicality, which are two characteristics valued particularly under South African conditions.

“While European manufacturers have traditionally had a strong presence in South Africa and have factories here, low-cost imported models from China are increasingly flooding the market. This development presents challenges as well as opportunities – for example new partnerships, which could help South Africa broaden its industrial base and tap into new export markets,” explains Tala. This would enable the country to reduce its dependence on European OEMs and strengthen local value creation through joint ventures, technology transfer, and local assembly plants, she continues. The automotive and supplier industry is extremely important to South Africa as it employs many people in a country where the unemployment rate was as high as 32 per cent in 2024.

E-mobility in the rear-view mirror

Graphic: Import taxes and lack of infrastructure keep e-mobility slow

Although conventional automobile production in South Africa is well established, electromobility is still in its infancy. In 2023, the share of electric cars in total new registrations was less than one percent. Numerous structural obstacles are slowing down development. For example, South Africa levies import duties of up to 25 per cent on electric vehicles, pricing many potential consumers out. Furthermore, batteries and other key components are not being produced locally. The real spanner in the works of the adoption of electric vehicles, however, is the unstable power supply: “One of the key obstacles to the growth of the local EV market is the lack of a comprehensive charging infrastructure, especially outside metropolitan areas,” says Tala. Planned power cuts –so-called ‘load shedding’– make it difficult to charge vehicles and undermine confidence in the everyday usability of e-mobility. Currently, there are only around 300 public charging stations nationwide. Under these conditions, expanding a sustainable mobility infrastructure remains a task for tomorrow.

The biggest challenges

Graphic: Big challenges

“The upcoming ban on combustion engines in the EU and the UK, as well as geopolitical tensions and trade conflicts, are forcing the industry to realign itself. It is therefore important to diversify export markets by tapping into regions such as Southeast Asia, Latin America, and the Middle East,” Tala points out. In addition to these external economic risks, the industry is facing mounting challenges at home. One of the most serious of these is the energy crisis: the ailing state-owned company Eskom cannot assure a stable power supply. The associated outages not only disrupt industrial production, but also logistics and supply chains. Furthermore, the energy crisis exacerbates social tensions and enables an illegal parallel economy that weakens the state. With modern, automated manufacturing processes, even a short power outage can result in costly downtime. Another issue is the high crime rate, particularly along major transport routes. The N3 route between Johannesburg and the port of Durban is particularly prone to attacks involving the theft of vehicles and cargo.

2035 is set to bring about change

Graphic: South African Automotive Masterplan 2035

The government is addressing these issues through the ambitious goals set out in the South African Automotive Masterplan 2035. First and foremost, the government aims to safeguard existing jobs in the automotive industry and create new employment opportunities. Specifically, it plans to promote supplier companies, development laboratories, and logistics centres. The government also intends to significantly increase vehicle production to 1.4 million units per year. “According to experts, the installed capacity is between 800,000 and 900,000 units per year. This means a significant part of the infrastructure is already in place, and the target of 1.4 million is certainly within reach in the medium term,” says Tala. In addition, local value creation is set to increase significantly. The proportion of locally manufactured components, such as engines, transmissions, and electronic control units, is set to increase. Important decisions are also planned in the field of electromobility. The government intends to introduce subsidies for the local production of electric vehicles, and is considering reducing import duties to open up the market for electric cars, while also facilitating investment in infrastructure. These measures are intended to help South Africa maintain its long-term competitiveness as a site for production.

Dr. Sead Husic

Text: Dr. Sead Husic

Newest member of the Gateway editorial team and research professional

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