A lack of intentional policy has seen the premature deindustrialisation of South Africa, but auto manufacturing could catalyse a turnaround, says Toyota SA Motors (TSAM) president and CEO Andrew Kirby.
He was speaking at the brand’s annual state of the motor industry conference in Johannesburg this week.
Although positive about the 2025 increase in new vehicle sales and predicting an even higher figure for 2026, Kirby in his keynote address echoed concerns recently expressed by fellow industry leaders at BMW, Volkswagen and Isuzu, including:
- reliance on the UK and Europe as South Africa’s main export destinations;
- lapses in critical policy to support completely knocked-down manufacturing and new energy vehicle (NEV) incentives;
- infrastructure challenges; and
- labour costs.
The erosion of the supplier base in South Africa was another impediment to competitive manufacturing, he said, referring to closures in the steel and tyre industries.
In 2025 81% of locally produced cars were exported to the UK and Europe. Imminent changes in legislation favouring NEVs could impact the viability of the regions as export destinations.
According to Kirby, African exports once accounted for 19% but currently sit at 8%, with grey and used imports making new vehicle sales a challenge.
Kirby, who also serves as vice-president of manufacturing at the automotive business council Naamsa, said Toyota had no plans to abandon its manufacturing plant in Prospecton, KwaZulu-Natal.
However, the disruptive local environment posed various threats that required clear solutions. “We cannot just think about it from a Toyota perspective; we have to think about it as an industry, manufacturers, component suppliers, and labour, working on a consolidated view with a ‘one voice’ approach,” he said.
While the energy supply had improved, remaining obstacles included rail infrastructure for vehicle transport and unreliable service delivery from local municipalities. “There is no evidence that this is turning around; we are needing to make contingency plans ourselves, which is expensive.”
Outlay was needed for the construction of a dam at the Prospecton plant because of an unstable water supply.
The brand has held the position of new vehicle sales leader for 46 consecutive years. Kirby forecast that 2026 will end on a total market figure of 630,000 units, up from the 596,818 vehicles sold in 2025.
He remains confident South Africa will eventually break the 700,000 threshold, as it did in 2006. Toyota ended 2025 with 148,124 units — its highest sales volume since 2007.
While top sales performers such as the Corolla Cross and Hilux are built locally, Toyota also relies on Indian imports, with products such as the Vitz, Starlet and Starlet Cross being produced by Suzuki and rebadged.
Kirby said he was not an advocate for an increase in protectionist duties on full imports, as it would have wide-ranging implications. He called, instead, for changes to tax and rebate systems that would give Toyota the opportunity to grow locally produced volume sales.
The government secures huge fiscal benefit from the South African automotive market. If that declines, it will have an impact on their revenue
— Prof Justin Barnes, Toyota Wessels Institute for Manufacturing Studies
Commenting on Chery’s recent acquisition of Nissan’s manufacturing assets in Rosslyn, Tshwane, he welcomed investment into the value chain and retention of jobs but said the success of operations would be judged by the extent to which the Chinese firm localises its production.
Prof Justin Barnes, executive director of the Toyota Wessels Institute for Manufacturing Studies (TWIMS), said there remains opportunity for regional value chains within Africa around ladder-based chassis products, specifically light commercial vehicles.
He spoke of affordability pressures on the consumer, increased by vehicle taxes. “The average level of tax on a South African vehicle is R120,000 — comprising VAT, ad valorem, carbon tax and a tyre levy.
“The government secures huge fiscal benefit from the South African automotive market. If that declines, it will have an impact on their revenue.”
Barnes said if the market was penetrated too aggressively by imports, the underlying benefits and value of locally built vehicles would be undermined. He called for the revision of the outmoded ad valorem tax in particular, “set at a time when the country’s cheapest cars were under R40,000”.
Leon Theron, senior vice-president of sales and marketing at TSAM, declared the brand was not scared of emerging competitors. He said that as far back as 2016, discussions with Suzuki around the alliance were conducted in anticipation of an increasing need for affordable compacts.
He described Toyota’s global “multi-pathway” approach of providing a variety of powertrains, from internal combustion to full-electric vehicles, as a competitive advantage over carmakers who have adopted singular areas of focus.
In 2026 TSAM plans to offer its first all-electric Toyota and Lexus models, as well as the new RAV4 and Land Cruiser FJ.
Business Times
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