South Africa’s auto industry holds advantage in Africa, Says Minister Tau

By Mandla Mpangase

South Africa’s automotive industry continues to anchor the country’s manufacturing capacity and offers a “unique competitive advantage” on the African continent, despite facing significant global and domestic headwinds.

This was the message from Minister of Trade, Industry and Competition, Parks Tau, addressing delegates at South Africa Auto Week 2025, hosted by naamsa (The Automotive Business Council) in Gqeberha from 1–3 October.

Tau said that while the sector has weathered one of its most challenging periods over the past nine months, it remains one of the cornerstones of South Africa’s economy. “In 2024, the industry contributed 5.2% to GDP and accounted for 22.6% of total manufacturing output. It provides nearly 500 000 formal jobs across assembly, components, retail and services, while supporting around one million livelihoods,” he told delegates.

New markets and partnerships

Tau highlighted fresh opportunities emerging on the continent and beyond.

Following recent engagements in Saudi Arabia and Nigeria, he said South African component manufacturers could partner with counterparts in those countries to expand their footprint. “We’re prepared to allow African investors to partner with our local companies and create manufacturing capacity in those markets. It is an opportunity we must take advantage of,” Tau explained.

At the same time, global OEMs operating in South Africa have committed to transitioning from semi-knockdown to complete knockdown production, deepening local manufacturing capacity.

“Our duty is to work with these companies to ensure they become part of the local production base, taking advantage of South Africa’s skills and positioning the country as a platform for access to African markets,” Tau added.

Transition to new energy vehicles

The minister stressed that the industry is at a critical “inflection point” as global markets accelerate their shift away from fossil fuel vehicles towards new energy vehicles (NEVs).

With major export destinations such as the European Union and the United Kingdom moving to ban new petrol and diesel vehicles from 2035, South Africa must adapt or risk losing market share.

Already, the shift is under way: in 2024, South Africa recorded 15 600 new energy vehicle sales, representing 3% of the local market. The sector also attracted R12-billion in new investment for NEV-related manufacturing.

Government has introduced measures to support this transition, including a 50% tax deduction for qualified NEV investments, partnerships with universities and research institutions, and strategies to localise production of critical inputs such as battery materials.

“This is not just an industrial project,” Tau said. “It is about positioning South Africa at the heart of the global mobility revolution, not as a taker of technology, but as a maker. If we succeed, we will safeguard exports, create jobs, and place Africa at the forefront of clean mobility solutions.”

Africa as an engine of growth

Africa has emerged as a key market, with the continent becoming South Africa’s second-largest export destination in 2024. Vehicle exports into Africa grew by 12.4% year-on-year to R48.1-billion.

The African Continental Free Trade Area (AfCFTA) is expected to further unlock opportunities, from reducing logistics costs to enabling vehicle assembly across the continent.

Beyond vehicles, Tau noted, it could also drive mineral beneficiation, particularly for critical minerals such as cobalt, graphite, and lithium essential for the NEV transition.

“Together, Africa can build a battery industry that reduces dependence on imports and positions the continent as a hub for clean mobility,” he said, adding that South Africa is leading the development of an African automotive hub that could align policies and attract investment.

In closing, Tau emphasised that South Africa’s auto sector, with its industrial depth and mineral wealth, is uniquely positioned to lead Africa’s role in the global energy transition.

“The automotive sector has been at the heart of our industrial story for more than a century. Today, it stands at a defining moment.

“Its transition to new energy vehicles will define our relevance in a low-carbon world, while its integration into Africa’s free trade area positions us as leaders on the continent,” he said.

“If we seize this opportunity, we will not only secure South Africa’s competitiveness but also place Africa at the forefront of the global mobility revolution.”