South Africa's auto sector hit by job losses and company closures
South Africa, a market long dominated by the likes of Volkswagen (VOWG.DE), opens new tab, Toyota (7203.T), opens new tab and Mercedes-Benz (MBGn.DE), opens new tab, saw sales of 515,850 locally produced cars last year, far below the South Africa Automotive Masterplan 2035 target of 784,509, Minister Parks Tau told delegates at an auto parts conference.
Some 64% of vehicles sold in South Africa are imports. Additionally, localisation - the level of local assembly, labour and components - remains stagnant at 39%, well short of the 60% target, while U.S. tariffs now significantly impact the country's 28.7 billion rand ($1.64 billion) automotive exports, he added.
"These pressures have triggered 12 company closures and over 4,000 job losses in two years," Tau said.
South Africa's automotive industry employs 115,000 people directly, with over 80,000 in component manufacturing alone. Experts say that with the U.S. tariffs on cars and parts that were imposed from April, jobs are under threat as some companies lose contracts in America.
On Tuesday, South Africa submitted a revised offer for a trade deal with Washington, in an effort to lower the 30% tariff U.S. President Donald Trump imposed last week.
To help respond to the challenges the industry is facing, an incentive scheme for local manufacturing now includes electric vehicles and associated components, Tau said.
"Localisation is not merely policy compliance, it is existential. A 5% increase in local content would unlock 30 billion rand in new procurement, dwarfing the 4.4 billion rand U.S. export market," Tau said.
International manufacturers such as Stellantis (STLAM.MI), opens new tab and China's Chery are looking to localise production in South Africa, with Stellantis ready to break ground in the Eastern Cape province.
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