South Africa’s automotive industry: Overcoming challenges

The automotive industry is one of the most important economic sectors in South Africa. However, while production figures remain solid, the industry is facing enormous challenges, ranging from structural problems within the country to global shifts in automotive technology.

South Africa’s strong automotive industry

South Africa has the most industrialised economy on the African continent. With a gross domestic product (GDP) of around 373 billion US dollars in 2023, the country consistently ranks at the top in terms of economic performance in all of Africa. Despite growing socioeconomic challenges, including high unemployment and structural bottlenecks in energy supply, the automotive industry remains a stable backbone of the South African economy. It contributes around five to six percent to the GDP, making it one of the country’s most important industries. Not only does this sector generate foreign exchange earnings through exports, it also secures over 100,000 jobs in areas such as vehicle assembly, supplier companies, and trade. The strong integration into global production chains and the presence of major international manufacturers makes the South African automotive industry a key strategic  sector in the economy.

Cars for the world

In 2024, South Africa produced around 515,850 vehicles. While this makes the country the largest automotive market on the African continent, it also saw a three percent decline compared to 2023. “Infrastructural problems and continued weak economic growth are putting pressure on consumer purchasing power. In addition, high borrowing costs are deterring potential buyers, which affects the sales of higher-priced models in particular,” says Jenny Tala, Southern Africa Director at Germany Trade & Invest (GTAI) in Johannesburg. It is also noteworthy that around 64 per cent of all vehicles manufactured in South Africa are exported to international markets. The most important buyer countries are Germany, the United Kingdom, Australia, and Japan — all of which are industrialised countries with high quality requirements. Key production facilities include the Toyota plant in Durban, the Volkswagen plant in Uitenhage, the Mercedes-Benz plant in East London, the Ford plant in Pretoria, and the BMW plant in Rosslyn. Some of these locations play a special role: for instance, the BMW plant in Rosslyn exclusively produces X3s for export.

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