29-01-2025

By Tiaan Pretorius: End2end Supply Chain Academy
The South African automotive manufacturing industry has long been a cornerstone of the economy, providing thousands of jobs and contributing significantly to GDP. However, recent developments are threatening the sustainability of this sector. From the rise of Chinese automakers to the challenges in the local steel industry and government trade policies, the future of automotive manufacturing in South Africa is at a crossroads.
The Rise of Chinese Automakers in South Africa
Over the past few years, Chinese car manufacturers such as GWM, Haval, Chery, and BAIC have aggressively expanded their presence in South Africa. Between 2019 and 2024, Chinese automakers increased their market share from 12% to 21% of light vehicle brands and from 2% to 9% of overall new vehicle sales.
South African consumers are increasingly choosing budget-friendly Chinese vehicles over traditional German luxury brands, like BMW, Mercedes-Benz, and Audi. Rising interest rates and the high cost of living have made affordability a top priority, leading to a decline in sales of luxury vehicles and an increase in used car purchases.
While the rise of Chinese brands offers consumers more affordable options, it also presents a major challenge to local automotive manufacturing, as these vehicles are primarily imported, impacting local production and employment.
The Takeover by BYD and Volkswagen
One of the most significant developments in the global automotive landscape is the aggressive expansion of BYD (Build Your Dreams) and Volkswagen (VW). BYD, which has overtaken Tesla as the world’s largest electric vehicle (EV) manufacturer, has been making inroads into international markets, including South Africa. With affordable and technologically advanced EV models, BYD is poised to reshape South Africa’s automotive market by offering an alternative to both traditional combustion engine vehicles and existing EV brands.
At the same time, Volkswagen has been expanding its presence in South Africa, leveraging its manufacturing plant in Kariega (Uitenhage) to produce vehicles for both local and international markets. VW’s strategic shift towards electric mobility and hybrid models further reinforces its dominance in the region. However, with growing competition from Chinese automakers, the question remains whether Volkswagen can maintain its stronghold in the South African market or if it will face challenges similar to those experienced in China, where BYD and other Chinese brands have surpassed legacy automakers.
The Steel Industry Crisis and Its Impact on Automotive Manufacturing
A key issue threatening the future of South Africa’s automotive industry is the imminent closure of ArcelorMittal’s metal smelting plant. This crisis stems from the government’s trade policies that allow South Africa to export raw iron ore to China while importing finished steel at lower prices than domestic production costs.
This dependence on Chinese steel threatens the local automotive industry, which relies heavily on a stable and competitive local metal supply. If domestic smelting facilities shut down, South African car manufacturers will have to import steel, raising production costs and reducing competitiveness.
Is South Africa Captured by China?
South Africa’s trade policies and government agreements with China have raised concerns about economic dependency. While Chinese investment has fueled growth in multiple industries, including energy, telecommunications, and automotive, there is growing concern that these agreements are weakening South Africa’s local manufacturing sector in favor of foreign dominance.
China’s increasing role in South Africa’s industries is not necessarily negative, but it becomes problematic when local businesses and manufacturers cannot compete, leading to job losses and economic stagnation.
Lessons from Australia: The Cost of Neglecting Local Industry
A cautionary tale for South Africa is Australia’s experience. Once home to two major automotive manufacturers, Holden and Ford, the industry collapsed when the government ceased support for the domestic steel industry. Without affordable, locally sourced metal, automotive manufacturing became unsustainable, forcing companies to shut down operations and increasing reliance on imports.
Today, Australia is entirely dependent on vehicle imports, leading to higher costs for consumers and fewer job opportunities. If South Africa does not prioritize local industry protection, it risks following a similar path.
What Needs to Change? A Call for Consumer Awareness and Government Action
To ensure a thriving automotive industry, South Africa needs a two-pronged approach:
Consumer Awareness: South Africans must recognize the economic impact of their purchasing decisions. Buying locally manufactured vehicles supports jobs, industrial growth, and long-term economic stability.
Government Intervention: Trade policies must protect local industries by reviewing import tariffs, incentivizing local manufacturers, and ensuring a competitive domestic steel supply.
The Future: A Critical Juncture for South Africa’s Automotive Sector
Without proactive measures, South Africa risks losing its automotive manufacturing industry and becoming entirely dependent on foreign imports. The time for action is now—government policies, industry stakeholders, and consumer decisions will determine whether South Africa maintains a robust, job-creating automotive sector or follows Australia into a manufacturing decline.
At End2end Supply Chain Academy, we are committed to fostering a deeper understanding of supply chain dynamics and economic sustainability. Stay informed, support local industries, and be part of the conversation shaping the future of South Africa’s automotive manufacturing sector.
Tiaan Pretorius

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