Business Leadership South Africa (BLSA) has formally submitted concerns to the department of trade, industry & competition over proposed changes to black empowerment rules and growing regulatory complexity.
The organisation, an independent association whose members include the leaders of some of South Africa’s biggest and most well-known businesses, also warned that the regulatory complexities, alongside high energy costs, logistics constraints and import pressures, are undermining manufacturing competitiveness and influencing investment decisions.
South Africa’s manufacturing sector has come under sustained pressure in recent years, with official data showing output declined 1.3% in 2025, the second consecutive year of contraction amid weak demand, rising costs and structural constraints.
While the vehicle industry remains one of the country’s most globally integrated sectors, it is increasingly characterised by plant closures, declining local content and shifting investment patterns, with multinational firms reassessing their presence and new entrants targeting selective opportunities in the market.
Speaking to Business Day, BLSA CEO Busisiwe Mavuso said the proposed changes to procurement scoring must be understood in a broader operating environment that manufacturers have consistently raised as a constraint.
“These pressures are well documented and continue to weigh on the competitiveness of the sector,” she said.
Mavuso said recent developments in the vehicle sector reflect this cumulative pressure rather than a single policy trigger.
“The Rosslyn exit, with the Egypt expansion, signals that South Africa is at risk of losing ground in comparative ease of doing business for manufacturing,” she said.
Nissan earlier confirmed it would sell its Rosslyn manufacturing plant to China’s Chery as part of a global restructuring strategy, ending local vehicle production at the facility while retaining its sales and distribution operations in South Africa.
The move coincides with a shift in investment towards other markets. Nissan has committed $45m to expand production in Egypt, reflecting a broader repositioning of its African manufacturing strategy.
Meanwhile, the Rosslyn plant is being repositioned as part of a new wave of investment. Chery, through its Jetour brand, has confirmed it will begin producing T1 and T2 models locally from 2027, with output targeted at about 50,000 vehicles a year and more than 3,000 jobs expected across manufacturing and supply chains.
The development reflects a changing composition of the vehicle sector, with established manufacturers scaling back production while new entrants, particularly from China, expand their local footprint.
However, industry participants said this does not necessarily indicate a strengthening of the broader industrial base.
In a recent interview on Business Day TV, Bridgestone Southern Africa MD Jacques Rikhotso said the sector has experienced a long-term erosion of industrial capacity, particularly in upstream manufacturing. He pointed to declining local content in vehicles assembled in South Africa, with more components now imported rather than produced domestically.
This, he said, reduces the share of value retained in the local economy and weakens supply chains, with implications for employment and industrial capability.
Rikhotso also highlighted rising pressure from imports and ongoing domestic constraints, including electricity costs, infrastructure inefficiencies and weak demand. While improved energy availability has supported a modest recovery in output, he said the rebound remains fragile.
These pressures are reflected in broader data. Manufacturing output declined 1.3% in 2025 while the sector continues to account for about 12% of GDP and more than 1.5-million jobs.
Mavuso said proposed changes to BEE procurement rules could add further strain. Under the draft amendments, firms that procure from majority black-owned suppliers that are not fully black-owned could see a reduction in their compliance score, potentially affecting access to incentives under programmes such as the Automotive Production and Development Programme.
She said this creates practical challenges in a sector in which supply chains are highly specialised and cannot be rapidly reconfigured.
The coexistence of plant closures, new investment and declining local content points to a sector undergoing structural change rather than uniform growth.
While investments such as Jetour’s localisation plans suggest that South Africa remains an attractive manufacturing base in parts of the vehicle sector, business and industry stakeholders indicate that policy certainty and improvements in the operating environment will be critical in determining whether new investment can offset the broader erosion of industrial capacity.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.