Minister of Trade Industry and Competition Archives

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.”

SA’s automotive sector can model African industrial resilience, says Minister

News / By Jenny Tennant

By Mandla Mpangase The annual Naacam Show takes place at a defining moment for the South African automotive sector, which is facing intersecting challenges that demand collaboration. With these words Minister of Trade, Industry and Competition, Parks Tau, began his assessment of the automotive manufacturing sector in a key note address to the Naacam audience in Gqeberha on 13 August 2025. This year’s show brings together automotive component manufacturers, public and private sector stakeholders, and service providers to foster collaboration, with the aim of galvanising the industry around the goals outlined in the South African Automotive Master Plan 2035. The automotive manufacturing sector is the cornerstone of South Africa’s manufacturing economy, contributing 5.2% to the country’s gross domestic product and 22.6% of the country’s industrial output. Despite these significant numbers, the industry faces several interconnected challenges, the minister noted. “Yet within these challenges lie transformative opportunities to redefine and leverage our global competitiveness.” The minister went on to urge all stakeholders to unify their actions across three pillars: on localisation, innovation, and inclusive transformation. Urgent challenges Although the industry employs 115 000 South Africans directly, with over 80 000 in component manufacturing alone, it faces the stark reality that domestic sales of locally produced vehicles plummeted to 515 850 units in 2024, far below the South Africa Automotive Master Plan 2035 (SAAM) target of 784 509. In addition, Minister Tau noted: “Importantly, 64% of vehicles sold here are imports, eroding local production scales.” Local content remains stagnant at 39%, well short of the 60% target, he said, adding this was at a time when United States tariffs are impacting significantly on the country’s R28.7-billion automotive exports. These pressures have triggered 12 company closures and over 4 000 job losses in two years. The erosion of industrial value of the sector is exemplified by recent suspensions at Mercedes-Benz and other original equipment manufacturers. The path forward: Strategic imperatives “Localisation is not merely policy compliance, it is existential,” Minister Tau said. “A 5% increase in local content would unlock R30-billion in new procurement, dwarfing the R4.4-billion US export market.” However, to achieve this, “we must act collectively to address some of the bottlenecks to growth”. With this in mind, the Department of Trade, Industry and Competition is reviewing the Automotive Production Development Programme (ADPD) as a comprehensive way of responding to the challenges the sector is facing, but also to ensure regular growth in the sector meets the goals of the SAAM. Some of these reforms include the incentive structure and shifting duty credits to reward manufacturing instead of assembly credits. “Our critical minerals and metals strategy will prioritise beneficiating platinum group metals, copper, and manganese for high-value new energy vehicle components like fuel cells and batteries.” Digitisation, decarbonisation, and diversification global competitiveness hinges on embracing disruption “At the dtic, we have been engaged on a path of developing a new industrial policy which focuses on decarbonisation, digitisation, and diversification. “As Naacam notes, carbon has become ‘part of the cost of doing business and increasingly, part of the value too’.” As the globe shifts to new energy vehicles and competition from China, it is crucial South Africa scale new products such as e-axles and thermal systems, and markets, particularly under the Africa Continental Free Trade Agreement. Referring to development around new energy vehicles, the minister reported that amendments of the automotive production and development programme phase 2 legislative framework for the inclusion of electric vehicles and associated components have been completed. In addition, the relevant amendments to the existing Automotive Investment Scheme (AIS) guidelines are being finalised to align with APDP2 amendments and the energy vehicle legislative framework. “The Taxation Laws Amendment Act, gazetted on 24 December 2024, introduces a 150% capital allowance for qualifying investments in energy and hydrogen vehicle production. It covers assets such as buildings, plant, and equipment brought into use between 1 March 2026 and 1 March 2036.” A critical minerals strategy and battery value chain master plan are also being developed. A comprehensive skills gap analysis was completed under the energy vehicles skills workstream. Curricula and certification programmes are now being developed with Tshwane University of Technology, Cape Peninsula University of Technology, Durban University of Technology, and Unisa. A pilot project involving 100 students is expected to be rolled out in Q1 of 2026 once the academic materials are finalised. Transformation: Scale, skills, and equity “We have walked a long journey with the automotive sector on transformation. It therefore goes without saying that inclusion drives growth.” SAAM’s target of 130 new black-owned manufacturers is advancing, with 26 black-owned small, medium, and micro enterprises (SMMEs) exhibiting at the 2025 Naacam Show. However, pace needs to be picked up. “To this end we are hopeful that the industry will support the endeavour of the Transformation Fund that we are pursuing at the dtic with the view to enhance overall transformation through Enterprise and Supplier Development (ESD) funds.” The minister added: “We need to accelerate skills development to ensure that we prepare our labour force for the dramatic changes that artificial intelligence will bring into the sector.” The government is also working hard to eliminate compliance burdens and reduce red tape which inhibits investment into the country’s automotive sector. “Our policy response is accelerating, and we plan on introducing an Omnibus (General Laws Amendment) Bill which looks to fast-track high impact investments and projects within 90 days.” In addition, the government is looking at the impact of imports into the country and the impact they are having on local production. “We want to grow the sector so our first option must not be to wield a stick but rather offer a carrot to these companies to attract more investment into the country, thereby increasing the value-add of particularly our component manufacturers.” Minister Tau also encouraged the industry to accelerate collaboration. “OEMs need to continue to honour local procurement targets and mentor and invest in SMMEs.” Tier 1 Suppliers must drive equity partnerships and Tier 2/3 development. “Naacam’s partnership with

‘Vision with action can change the world’

News / By Jenny Tennant

It is fitting, in a month where the world remembers former president Nelson Mandela, that the Minister of Trade, Industry and Competition, Parks Tau, opened his budget vote address with a quote from Madiba: “Action without vision is only passing time. Vision without action is merely day-dreaming. But vision with action can change the world.” These words reverberate within the Tshwane Automotive Special Economic Zone’s core, sitting at the heart of the special economic zone’s (SEZ) ethos. Speaking in Parliament on 16 July 2024, Minister Tau noted that the words also echo the country’s aspirations to build a dynamic, industrial and globally competitive South Africa that is transformed, inclusive and equitable. This is “anchored on industrialisation, transformation, job creation and building a capable and developmental state”. The minister emphasised the importance of manufacturing-led growth. “Manufacturing creates jobs in upstream and downstream sectors,” Tau explained, adding that these jobs were typically permanent and paid decent wages, with workers able to access to skills development and career path opportunities. Instruments such as the South African Automotive Masterplan are crucial; with their focus on supporting localisation, increasing investment, and creating and retaining jobs. “We have industrial capabilities as a country,” he added. The Department of Trade, Industry and Competition (the dtic) would, in identified industries, work closely with relevant state-owned entities and industry to support local manufacturing of key products and to create jobs. Growing the export markets Of importance to TASEZ, is the fact that the minister identified the need to expand and improve exports. South Africa’s automotive sector already exports the bulk of the vehicles manufactured here. In May 2024, naamsa noted that “record high vehicle exports ensured that the automotive industry outperformed the rest of the manufacturing sector” last year. “The export value of vehicles and automotive components increased by R43.5-billion, or 19,1%, from the R227.3-billion in 2022 to a record R270.8-billion in 2023, comprising 14,7% of total South African exports.” Naamsa noted the export performance included “record exports to all major regions, including the European Union, Africa, the Southern African Development Community, and North America”. Minister Tau pointed out that South Africa’s location at the tip of “the second-fastest growing region in the world”. To reduce a dependence on a small domestic market, “the dtic will implement new export measures, coupled with expanding the current measures and improving their effectiveness” and will work towards expanding its export footprint through BRICS+ (Brazil, Russia, India, China,Iran, Egypt, Ethiopia and the United Arab Emirates), the African Continental Free Trade Area (AfCFTA), the African Growth and Opportunity Act (AGOA) partnership with the United States, and the Economic Partnership Agreement with the EU. Turning to SEZs, the minister reminded parliament that the reason the country had set up SEZs was “to expand economic activity to under-developed parts of South Africa. There are many benefits to this including, creating jobs closer to where our people live and thereby reducing the cost burden poor people carry.” There was no logical or economic rationale for forcing people to live far from their families in increasingly crowded living spaces. “Spatial equity is therefore, a non-negotiable.” Referring to the 11 SEZs established so far, the minister noted: “These SEZs have generated investments amounting to R19.6-billion. In addition, these SEZs provide an on-going revenue stream to national government through ongoing corporate, PAYE and VAT payments. These contributions to tax revenue across over 100 firms located in SEZs far outweigh the initial establishment costs.” Like TASEZ, which is located between Eerstrust, Mamelod and Nelmapius, South Africa’s industrial parks are often located in or adjacent to townships. And these industrial parks provide jobs and incomes to people from the neighbouring townships. “We, therefore, encourage private-sector participation in the industrial parks, in order to assist to improve operations and facilities, and encourage private sector investment.”

Minister of Trade, Industry and Competition delivers key policy assessment at TASEZ

News / By Jenny Tennant

The Tshwane Automotive Special Economic Zone (TASEZ) was chosen to host the delivery of a critical national policy assessment by the Minister of Trade, Industry and Competition, Ebrahim Patel on Tuesday, 7 March 2024. The minister delivered the Industrial Policy and Strategic Review – Transforming Vision into Action: Charting South Africa’s Industrial Future. “TASEZ was chosen as the venue for this occasion as it demonstrates how changes in the approach to implementing industrial policy has given different, significantly positive, results,” the minister said at the beginning of his review. This review – and plan for the future – takes place at a critical time, as the country celebrates 30 years of democracy, and a few weeks before South Africa’s seventh administration takes office. South Africa’s economic development has, over the past three decades, leaned into the national industrial policy to drive growth and transformation in an effort to eliminate poverty and reduce inequality, with industrialisation identified as a key to unlocking the economy, building investor confidence and creating jobs across multiple sectors. Economic impact of investment into South Africa Minister Patel noted that foreign direct investment (FDI) into South Africa rose to R1.1-trillion between 2019 to 2023, a significant increase from the previous five-year period which garnered R312-billion. Investments over the past five years were 3½ times larger. This was despite the turbulent headwinds the country had to endure over the last five years: The FDI packages ameliorated much of the negative impact of the six shocks the country endured. “The resilience of the South African economy has surprised many commentators,” Minister Patel noted. He referred to the 2023 EY Attractiveness Africa Report which highlighted that South Africa attracted the most FDI projects in Africa – 157, making up 23% of the continent’s total. According to the report, South Africa’s FDI was valued at US$26.8-billion and created about 15 000 jobs, the highest number in southern Africa. The minister also noted that of the R1.5-trillion pledged at the five cycles of the South Africa Investment Conference, a third of the projects had already been completed, with others under construction. “What we did in these five years is to try and get investment to flow notwithstanding the headwinds – and we have already seen some real impact.” Minister Patel reviewed the work done by the Department of Trade, Industry and Competition over the past five years, discussing a number of success stories in a variety of sectors; examining the challenges that had arisen; and charting a way forward to speed up the various economic programmes. Several key elements were vital to the success of the reimagined industrial strategy, including: This was supported by a number of programmes including the development of sectoral masterplans, which saw a move towards a multi-stakeholder approach, “in which government, the private sector and labour collectively developed and implemented plans”. The masterplan process modelled a new approach, where the state works in a flexible way to address the diverse concerns facing individual companies and other stakeholders. A catalytic project on SEZ development TASEZ is shining example of this approach; showcasing a more rapid and coordinated development process, particularly in reference to setting up special economic zones. One of the key drivers of TASEZ’s business approach is the South African Automotive Masterplan, with its focus on transforming the sector, promoting localization and creating jobs. TASEZ is a critical case study in the speedy implementation of the special economic zones in South Africa. It took four short years for TASEZ to develop from a dusty veld to a modern industrial hub, with an automotive original equipment manufacturer (OEM) – the Ford Motor Company of Southern Africa – supported by other component manufacturers. “Investment was unlocked through an anchor firm, Ford, while the dtic, the Gauteng government, and the City of Tshwane pooled their resources and capabilities,” the strategy review notes. “This solid base allowed for the rapid unlocking of 11 investments by component firms and help establish the SEZ by developing a network of interconnected producers around the zone.” The review noted: “All of this was underpinned by strong alignment with pre-existing policy including state support through the Automotive Production and Development Programme and investment funding through projects like the Automotive Investment Scheme.” In its short existence, TASEZ has seen an investment of R16-billion from Ford; R5.6-billion from the various component manufacturers; and R3.92-billion from government – in its first phase of development. In addition, the first phase of TASEZ has seen the creation of 3 244 permanent jobs in the automotive manufacturing sector and a further 5 071 jobs in construction. Procurement spend in the small, medium and micro enterprise sector has totalled R1.7-billion so far. “This mode – of moving quicky, working through partnerships, coordinating across the state and aligning with broader support programmes – offers a sturdy pathway for the revitilisation of industrial policy,” the review report noted. TASEZ is now preparing to begin the second phase of development, with several investors already preparing to join the hub. “As a special economic zone that plays an integral role in transforming the automotive manufacturing sector,” TASEZ CEO Dr Bheka Zulu, adding that the Africa’s first automotive city could attest to the importance of a strong industrial policy in encouraging global investors.