Our Correspondent | Africa Guardian
South Africa’s automotive industry celebrated a significant milestone in 2024, marking 100 years of car manufacturing. The centenary was commemorated during the SA Auto Week in October, hosted by Naamsa – The Automotive Business Council. However, while the industry has much to celebrate, its future faces significant hurdles.
A Legacy of Success
In 2023 alone, South Africa produced 632,972 vehicles, with 63% of them exported. These exports contributed 15% to the country’s total exports, cementing the automotive sector as a vital economic pillar. Representing 5.1% of South Africa’s GDP, the industry supports 116,000 manufacturing jobs and close to 400,000 in retail and repairs.
According to Naamsa, the sector is a “success story of South Africa’s democratic era.” A record 399,594 vehicles were exported in 2023, but this success truly began after 1994 when South Africa emerged as a significant player in global automotive exports.
The Early Years
South Africa’s automotive journey began modestly. The first car arrived in 1897, but it wasn’t until 1924 that Ford established a local assembly plant in Port Elizabeth (now Gqeberha), followed by General Motors in 1926. These early factories, set up in former wool warehouses, laid the foundation for an industry that steadily grew through the 20th century.
By 1929, annual car sales had reached 20,456, a significant increase from 13,547 in 1925. The 1930s and 1940s saw more manufacturers establish operations, including Austin, Chrysler, and Mercedes-Benz. Despite wartime shortages, the industry expanded, and by the 1950s, South Africa was producing a variety of vehicles, including locally designed models like the Volkswagen Citi Golf.
Challenges and Policy Shifts
The industry faced significant challenges during apartheid, including sanctions and divestment. Ford and GM exited the country in the 1980s, but their facilities were maintained by local firms. The 1990s brought renewed optimism with the end of apartheid and the introduction of the Motor Industry Development Programme (MIDP) in 1995.
The MIDP incentivized exports and reduced import tariffs, enabling South Africa to access international markets through agreements like the African Growth and Opportunity Act (AGOA) and the Free Trade Agreement with the EU. This shift transformed the industry into a global export hub.
Milestones in the Modern Era
South Africa’s automotive exports have grown significantly since the early 2000s. Volkswagen has become a leader, reaching 1.5 million exports in 2024, with its Polo model as a top performer. Ford celebrated its millionth locally produced Ranger, while BMW, Toyota, and Mercedes-Benz continue to export models globally.
The MIDP was replaced by the Automotive Production and Development Programme (APDP) in 2013, focusing on production incentives rather than exports. However, the industry still falls short of the Department of Trade and Industry’s target of producing 1.2 million vehicles annually.
The Electrification Challenge
As the global automotive industry shifts toward electrification, South Africa faces mounting pressure. The European Union, its largest export market, plans to ban petrol and diesel vehicles by 2035. President Cyril Ramaphosa acknowledged these challenges during SA Auto Week, emphasizing the need for a New Energy Vehicle (NEV) policy to incentivize the production and sale of electric and hybrid vehicles.
The industry also grapples with persistent issues such as unreliable electricity supply and logistical inefficiencies at ports. Volkswagen’s global brand head, Thomas Schäfer, and Ford SA’s CEO, Neale Hill, have both expressed concerns about the sector’s future viability.
Looking Ahead
Despite its challenges, South Africa’s automotive industry remains a source of national pride. Producing over 600,000 vehicles annually, it ranks 22nd globally, contributing significantly to the economy. However, as global markets evolve and electrification becomes the norm, the industry must adapt quickly.
The success of new policies and infrastructure improvements will determine whether South Africa’s automotive sector thrives or struggles in the coming decades. As history has shown, resilience and innovation are key to sustaining its legacy.
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