South African automotive components manufacturers, under siege from US tariffs and a flood of cheap vehicle imports, have insisted that foreigners eyeing manufacturing opportunities in the country should be forced to use local expertise, create jobs and impart skills.
They were speaking at the National Association of Automotive Component and Allied Manufacturers (Naacam) 2025 show, held in Gqeberha under the spectre of looming plant closures, geopolitical issues affecting the viability of exports, increasing competition from imports eroding domestically-produced vehicle sales, and ongoing uncertainty related to energy and logistics parastatals.
Thabo Shenxane, CEO of the Eastern Cape’s Automotive Industry Development Centre, said enforced localisation, job creation and skills development should be non-negotiables for any foreign investor eyeing the local space.
Motor companies are pressing the government to increase the duty on imported new cars and bakkies from 25% to 30%. They pointed to China, where generous government subsidies allow auto manufacturers to produce vehicles cheaply, which are then flooded in markets around the world, including South Africa.
They also raised concerns about the impact of US tariffs on the industry. Among companies threatened by the tariffs is assembly line builder Jendamark Automation, facing the loss of as much as R750m due to the measures that came into effect last Friday.
The higher tariffs highlighted the need to speed up implementation of the African Continental Free Trade Area agreement, aimed at boosting trade, investment and job creation through a sustainable supply chain across the continent.
The Naacam gathering brought together various component manufacturers and suppliers, from makers of filtersm rubber fittings, and plastic trims, to metal frames, paint, electronics and glass, with the sector said to account for 80,000 direct jobs. According to Naacam CEO Renail Moothilal, components worth more than R63.4bn were exported from South Africa in 2024, contributing 5.25% to GDP, and accounting for 22.6% of total manufacturing output.
But the sector is behind on certain ambitions guided by the South African Automotive Master Plan, which aims for 60% local content by 2035 — increasing sector employment to 224,000 jobs, and ensuring at least 25% of the supplier base at tier 2 and tier 3 levels are made up by black-owned businesses.
Adding to the industry’s woes was the recent announcement of the wind-down of Goodyear’s tyre manufacturing facility in Kariega, Eastern Cape. ArcelorMittal’s threatened closure of steel mills in Newcastle and Vereeniging will impose further constraints on the supply of raw materials required for auto manufacturing.
The tally of closed businesses identified by Naacam was 12, anticipated to have affected 4,000 employees across the supply chain.
Toyota SA CEO Andrew Kirby said industrialisation remained the most reliable pathway to South Africa’s long-term prosperity. “South Africa has not lost its manufacturing base, but we have not expanded or deepened it,” he said.
CEO of BMW SA Peter van Binsbergen said they had moved to produce the plug-in hybrid electric vehicle (PHEV) version of the BMWX3 SUV due to higher demand for hybrids.
The company’s flagship plant in Rosslyn, Tshwane, which has been in operation since 1973, is the exclusive producer of the X3 PHEV worldwide, on the back of a R4.2bn investment that went into upgrading the facility to prepare it for production of the hybrid engine. “The world has switched to hybrids over the last two years, so we have seen an unexpected demand,” he said.
Trade, industry & competition minister Parks Tau said reforms to the Automotive Production Development Programme Phase 2 regulations would include an incentive structure that shifts duty credits to reward manufacturing, instead of assembly credits. He also alluded to a 150% capital allowance to incentivise new electric vehicles and hydrogen vehicle production. This will cover assets such as buildings, plants and equipment brought into use between March 2026 and March 2036.
Tau forecasts a 5% increase in local content would unlock R30bn in new procurement, easing the prospect of losing the R4.4bn US export market.
Eastern Cape premier Oscar Mabuyane punted a rollout of Eskom energy security investments in the province costing R2.5bn, between 2025 and 2030, potentially yielding reliable power supply to service industries.
He said once complete, Transnet’s planned Ukuvuselela project would become a high-capacity vehicle freight corridor between Gauteng and the Eastern Cape, operating from 2028, and able to support the transfer of 150,000 units.
Deputy President Paul Mashatile said a revised trade proposal to the US could relieve tariff-related pressures on the automotive manufacturing sector. In a separate discussion, however, general secretary of the National Union of Metalworkers of South Africa, Irvin Jim, said industry regulations needed review in order to stimulate the market, including revisiting factors such as high ad valorem tax on new vehicles.
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