Local automotive business council Naamsa hosted its annual conference in Gqeberha last week.
Now in its fourth year, the Autoweek event sees the convergence of industry leaders, manufacturer representatives and government officials discussing industry challenges and solutions.
The Eastern Cape and its special economic zones represent a crucial part of the motor industry, home to various plants and component producers in the supply chain.
Billy Tom, CEO of Isuzu SA and president of Naamsa, said the government has a key role to play in salvaging what is left of the local industry — by fighting corruption, boosting infrastructure and logistics, and securing electricity supply.
Tom spoke of challenges facing manufacturing plants at municipal level. He used the example of a nearby road servicing an Isuzu vehicle storage facility where the traffic lights were rarely functional. The business leader opted to establish an electricity connection from the facility to power the traffic lights, bearing the cost and effort.
Isuzu, Volkswagen and Ford have longstanding operations in the region. On the horizon is the opening of a Stellantis plant, which is set to produce the Peugeot Landtrek bakkie from 2027.
Neale Hill, president of Ford SA and former president of Naamsa, echoed Tom’s views of enhancing service delivery to support business.
“We need to nurture the investments that have been made, in addition to pursuing new investments, all sectors of government must work together to allow manufacturers to do what they are good at doing,” he said during a panel discussion.
Hill said Ford’s local manufacturing costs continue to ramp up amid declining efficiency, warning the brand has to compete with various global plants.
“If we are not cost competitive in South Africa, our company will choose to deploy its capital elsewhere,” Hill warned.
Automotive plant closures have already taken place in the Eastern Cape, most notably Goodyear shutting the doors of its Kariega plant, leaving 900 people without work. Component manufacturing body Naacam noted as many as 12 plants have closed, tallying an estimated 4,000 job losses.
The blue oval brand leader also expressed concerns about South Africa being eclipsed by other African countries as an investment destination.
Morocco was singled out as an example. A recent R100bn investment by a Chinese firm to produce electric vehicles is likely to see the North African country meet ambitions to produce one million vehicles a year.
Toyota SA CEO Andrew Kirby remarked that South Africa is at an important inflection point, having lost the industrial leadership position it held over countries such as Brazil, India, Mexico and Argentina 25 years ago.
Kirby offered pragmatic approaches to arrest the downward trend, arguing that the local new vehicle market has the potential to exceed 700,000 units annually.
He said South Africa needs to be careful to avoid becoming an import-replacement market, alluding to the influx of Chinese entrants that do not produce locally.
Kirby called on the government to stimulate completely-knocked-down (CKD) production, while phasing out semi-knocked-down (SKD) assembly operations, which he described as a stumbling block that does not benefit the local economy.
“It is a loophole that provides the opportunity to set up low-scale assembly, employing a few people and bypassing import duties.”
In comparison, Kirby asserted that a CKD operation sees billions of rand in investments, employment prospects for thousands of people and a more complex manufacturing environment, with a deep level of localisation.
In addition, Kirby suggested a review of ad valorem tax on locally-produced vehicles.
The Toyota CEO observed that the South African auto industry needs to transition towards new energy vehicle (NEV) manufacturing to retain its export volumes to EU and UK regions, which face looming restrictions on internal combustion engine (ICE) vehicles.
BMW SA CEO Peter van Binsbergen observed that South Africa remains Africa’s auto manufacturing leader, accounting for more than half the continent’s production.
He said the shift towards EV models in markets abroad represents an opportunity for South Africa to become a key global player, especially because of its mineral resources.
According to the department of trade, industry and competition, in 2024, South Africa’s vehicle exports to the continent were worth R48.1bn, an increase of 12.4% year on year.
Tata and Mitsubishi CEO Thato Magasa observed that South African consumers are spoiled for choice, with as many as 50 passenger car brands and over 2,200 model derivatives currently available. Executives from Naamsa overseeing manufacturers that produce in South Africa took a buy-local stance, urging the government in particular to stock its fleets with South African-built models at all levels.
Delivering a keynote address on the second day of Autoweek, minister of trade, industry and competition Parks Tau confirmed the government’s National Critical Minerals Strategy. It is aimed at securing supply chains for the domestic NEV industry, attracting investment into gigafactories, and supporting the development of hubs for battery assembly, recycling and research.
Tau said South Africa will advance the creation of an African Auto Pact, to harmonise policies that boost industrial capacity across the continent.
“Our vision is an auto sector that creates value from Cape to Cairo,” said Tau.
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