3 days ago
SA's auto sector hit by job losses and company closures
Low domestic sales of locally made cars, an influx of imports and low local content have led to 12 company closures and more than 4,000 job losses in the South African motor industry over two years, the trade minister said on Wednesday.
South Africa, a market long dominated by the likes of Volkswagen, Toyota and Mercedes-Benz, 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.
About 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 US tariffs now significantly affect the country's R28.7bn automotive exports, he added.
'These pressures have triggered 12 company closures and more than 4,000 job losses in two years,' Tau said.
South Africa's automotive industry employs 115,000 people directly, with more than 80,000 in component manufacturing alone. Experts say that with the US tariffs on cars and parts that were imposed from April, jobs are under threat as some companies are set to lose contracts in America.
South Africa on Tuesday submitted a revised offer for a trade deal with Washington, in an effort to lower the 30% tariff US President Donald Trump imposed last week.
To help respond to the challenges in the industry, 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 R30bn in new procurement, dwarfing the R4.4bn US export market,' Tau said.
International manufacturers such as Stellantis and China's Chery are looking to localise production in South Africa, with Stellantis ready to break ground in the Eastern Cape.
