A business engagement held on September 6th was central to Team South Africa’s program, explicitly linking local industrial policy with continental market integration. This session, titled “South Africa fostering local automotive production and accelerating investment in the African continent through the AfCFTA,” brought together various stakeholders. These included the dtic, industry agencies like AIDC, investment zones such as the East London IDZ and Tshwane Automotive SEZ, OEMs, and senior government speakers, including Deputy Minister in the Presidency Mr. Kenneth (Kenny) Morolong. Their collective aim was to advocate for the idea that Africa’s automotive future relies on coordinated policy, investment incentives, and intra-African market access.

Why the automotive sector? Growth, scale and strategic value

South Africa’s automotive industry is a cornerstone of its manufacturing sector, contributing approximately 4.9% to GDP (encompassing manufacturing and retail) and nearly a fifth of all manufacturing value-add in recent years. This vital sector also sustains close to half a million jobs, both directly and indirectly. With production consistently around 500,000 vehicles annually (2022–2023 levels), the national Automotive Masterplan (SAAM) aims for an ambitious 1.4 million units per year by 2035. Achieving this target would significantly boost scale, deepen the supply chain, and enhance export capabilities. These factors underscore why the dtic and industry stakeholders prominently feature the automotive sector in diplomatic trade missions like IATF.

South Africa’s automotive industry demonstrates remarkable resilience. Despite global supply-chain disruptions and regional market instability, the country achieved a strong recovery in new-vehicle sales in 2022 and maintained robust export performance, resulting in a positive auto trade balance in 2023. This proven track record makes South Africa an attractive prospect for investors, highlighting its capacity for large-scale production and export. However, sustained success hinges on securing policy certainty, localisation incentives, and enhanced intra-African market access.

The AfCFTA as a lever

South Africa’s presentation at IATF reimagines the African Continental Free Trade Area (AfCFTA) as an industrial tool, rather than solely a tariff-reduction agreement. This framework can facilitate expanded market access for South African-made vehicles and components, justify localisation and scale investments by Original Equipment Manufacturers (OEMs), and foster commercially viable cross-border supply chain integration. The private sector’s interest in an “African production-to-African market” model was evident at IATF. For instance, Isuzu has publicly announced intentions to establish South Africa as a hub for African truck production, demonstrating an OEM strategy that becomes commercially logical only with clear continental demand and unhindered trade routes.

Yet the AfCFTA alone will not eliminate frictions. Non-tariff barriers, inconsistent standards, weak intra-continental logistics and illicit trade continue to constrain scale. South Africa’s representatives at IATF emphasised realistic sequencing: pair AfCFTA market access with harmonised standards, regional industrial cooperation on components, targeted trade remedies, and selective financial instruments to derisk greenfield investments.

Context and competition: comparing trajectories in North and West Africa

South Africa faces stiff competition for automotive industrial leadership within Africa. Morocco, for instance, has aggressively pursued investments from OEMs and battery supply chains, expanding its capacity and integrating into European value chains. Its rapid growth, including recent Stellantis expansions, demonstrates how targeted incentives and geographic proximity to Europe can quickly achieve scale.

Conversely, markets such as Egypt highlight the impact of macro instability; pronounced sales volatility in 2022–23 due to currency pressures and import constraints underscore how economic challenges can undermine domestic automotive demand even where manufacturing capacity exists. This comparison clearly illustrates that policy stability and complementary industrial incentives are as crucial as market size.

From fairground to factory floor: pragmatic next steps

South Africa’s participation in IATF 2025 was a well-executed strategy, combining high-level diplomatic efforts (aligned with G20 themes), direct business engagement, and a strong appeal to investors. To translate the momentum gained at IATF into lasting industrial results, three practical steps are crucial. Firstly, it is imperative to expedite the harmonisation of standards and certification across key African trade corridors to mitigate non-tariff barriers. Secondly, localisation incentives should be coupled with AfCFTA-driven off-take commitments, where public procurement across regional blocs can serve as a foundation for emerging supply chains. Thirdly, reinforcing customs enforcement and regional collaboration is essential to curb illegal imports, thereby ensuring that local demand supports local production.

South Africa has the potential to become Africa’s automotive anchor. This is not about domination, but rather about catalyzing a continental ecosystem with multiple specialised nodes, including Morocco, Nigeria, and Kenya, all engaging in trade. IATF 2025 demonstrated the existing political will and private interest; the next step is consistent industrial implementation.

Written By:

Sesona Mdlokovana

Associate at BRICS+ Consulting Group 

African Specialist

** MORE ARTICLES ON OUR WEBSITE https://bricscg.com/

** Follow https://x.com/brics_daily on X/Twitter for daily BRICS+ updates

Source link