The South African automotive sector has been grappling with significant challenges, leading to the shutdowns of 12 companies and the loss of more than 4,000 jobs within a span of two years.
This troubling development was highlighted by Trade Minister Parks Tau during an auto parts conference, as reported by Reuters.
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The nation, which has traditionally been a stronghold for automotive firms such as Toyota, Mercedes-Benz, and Volkswagen, recorded sales of 515,850 locally manufactured cars in 2024.
This figure falls substantially short of the South Africa Automotive Masterplan 2035’s goal of 784,509 vehicles.
A critical issue facing the industry is the high percentage of imported vehicles, which currently stands at 64%.
Moreover, the localisation rate, which measures the extent of local assembly, labour, and components, remains stuck at around 39%, significantly below the desired 60% threshold.
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By GlobalDataTau noted that compounding the industry’s woes are the US tariffs that have adversely affected South Africa’s R28.7bn ($1.64bn) automotive exports.
These tariffs pose a threat to jobs, particularly as some companies have lost contracts in the American market.
In response to the tariffs, which were imposed by US President Donald Trump last week at a rate of 30%, South Africa submitted a revised offer for a trade deal with Washington this week.
Despite months of negotiations, the two countries have yet to reach a satisfactory trade agreement, leaving South African exports to the US to face the highest tariff rate in sub-Saharan Africa.
To address these challenges, the South African government has expanded its incentive scheme for local manufacturing to include electric vehicles (EVs) and related components, added the minister.
Stellantis and China’s Chery are considering setting up production in South Africa.
In July 2025, Stellantis announced plans to expand its South African automotive market presence with the introduction of Leapmotor brand EVs. The first model, the C10 REEV, will be available at select Stellantis dealers starting in September, with more models anticipated to be released in 2026.
The South African automotive industry is a critical employer in the country, with 115,000 individuals directly employed and more than 80,000 working in component manufacturing.
