![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2026\/03\/VW-1.jpg\")
<\/a>VW, which directly employs around 4,000 people in South Africa, needs to make a decision in the coming weeks on whether to make a large investment in the plant to produce a new light pick-up truck.<\/p>\n\n\n\n
That would keep the line running into the next decade, but the current economic and policy environments don\u2019t justify proceeding with a big investment, Biene said.<\/p>\n\n\n\n
A decade ago, nine of the top 10-selling vehicles were South African-built. Now, fewer than one-in-three are. Suzuki, which imports most of its models from India, is the second-largest seller of cars in the country, after Toyota.<\/p>\n\n\n\n
Chery, from China, only entered the market in 2021, but last year it displaced Volkswagen as the country\u2019s third-largest carmaker.<\/p>\n\n\n\n
China\u2019s rapid rise to become the world\u2019s biggest car exporter has been driven by significant overcapacity at home, meaning its automakers compete with South African manufacturers at home and abroad. Around two-thirds of South African-made cars are exported.<\/p>\n\n\n\n
According to Bloomberg Economics, China\u2019s share of car imports by volume climbed to 27% last year from 21% in 2024. For trucks, it rose to around 50% from nearly 30%. The price of imported cars fell 4.5% in 2025.<\/p>\n\n\n\n
\u201cWe get beaten up by the imports, mainly from India and China,\u201d Biene said. \u201cWhich is not a train smash if the playing field were level.\u201d<\/p>\n\n\n\n
Biene said that local labour costs are twice what they are in India, where Maruti Suzuki\u2019s vast facilities produce four times more vehicles in a year than South Africa\u2019s entire industry combined. On top of that, infrastructure and logistics costs are high.<\/p>\n\n\n\n
South Africa\u2019s power supply has stabilised in the past year, after 17 years of chaotic and economically damaging supply disruptions. Energy remains expensive.<\/p>\n\n\n\n
Municipal water and electricity networks are crumbling after decades of under-investment, and outages are increasingly frequent in Johannesburg and other cities.<\/p>\n\n\n\n
State-owned port and rail infrastructure have improved marginally for bulk raw material exporters, such as coal and iron ore, but those improvements are yet to benefit carmakers, according to Ford\u2019s local chief executive officer, Neale Hill.<\/p>\n\n\n\n
Ford\u2019s plant in Silverton, Pretoria, is 600 kilometres (370 miles) from its nearest export terminal. Hill said, \u201cIt\u2019s still cheaper to truck our vehicles than put them on the rail.\u201d<\/p>\n\n\n\n
He said it cost the company $37 more per vehicle to use rail, and given the plant\u2019s capacity, \u201cit adds up.\u201d<\/p>\n\n\n
<\/a>The company, which manufactures the Ranger pick-up in South Africa and has a capacity for 200,000 units a year, has cut 470 jobs at its factories in Silverton and Nelson Mandela Bay.<\/p>\n\n\n\n
Mike Whitfield, South Africa CEO of Stellantis, which planned to build a Peugeot-branded pick-up truck in Nelson Mandela Bay, told Bloomberg in an interview that it has paused these plans.<\/p>\n\n\n\n
Mercedes-Benz, which exports the C-Class compact sedan out of the Eastern Cape city of East London to the US, has cut 700 workers and is looking to share its factory with another brand.<\/p>\n\n\n\n
Nissan abruptly announced that it will cease local manufacturing in June, after more than 60 years, opting to sell its facilities to Chery at the beginning of 2026.<\/p>\n\n\n\n
Several automotive CEOs told Bloomberg that they need to see better governance at the state-owned logistics behemoth Transnet, and for private investment into port, rail and electricity infrastructure to be sped up.<\/p>\n\n\n\n
They also want a number of policy changes that they believe would stimulate local demand and boost competitiveness.<\/p>\n\n\n\n
Among them are reforms to a manufacturing voucher system that is supposed to reward local production, changes to taxes on new car purchases, and an end to state support for semi knock-down, or SKD, assembly operations\u2014where cars are shipped as kits and assembled elsewhere, usually for tax efficiency.<\/p>\n\n\n\n
Basic assembly plants employ significantly fewer workers than complete knock-down factories.<\/p>\n\n\n\n
The CEOs also said they would like Black Economic Empowerment regulations, which require mandated levels of Black ownership and management participation, or participation in so-called \u201cequity-equivalent programs\u201d such as the Automotive Industry Transformation Fund, to apply to importers as well as to manufacturers.<\/p>\n\n\n\n Anthony Black, emeritus professor at the University of Cape Town\u2019s School of Economics, said the industry\u2019s complaints have some merit. <\/p>\n\n\n\n \u201cSome of their requests have some validity. The growth in imports is a problem,\u201d he said. \u201cThe policy also needs to be adjusted to not make it worthwhile to set up SKD operations. I feel quite strongly about that.\u201d<\/p>\n\n\n\n Union leaders have also called for the government to raise tariffs on automotive imports. That would be politically challenging, since South Africa is trying to grow its trading ties with China and India in response to the hostility of the US administration under President Donald Trump, which has taken a vituperous approach to the country, falsely accusing the government of perpetuating a \u201cgenocide\u201d against its white citizens.<\/p>\n\n\n\n Tariffs would also add to inflationary pressures in the country, according to analysis by Bloomberg Economics.<\/p>\n\n\n\n Donald Mackay, founder of consultancy XA Global Trade Advisors, said a modest tariff increase of up to a maximum of 30% might help the industry.<\/p>\n\n\n\n \u201cAnything which goes beyond that has massive effects on the price of cars in South Africa,\u201d he said. \u201cThe whole industry would be worse off with that.\u201d<\/p>\n\n\n\n Something has to change, though. \u201cThere\u2019s an enormous problem in the automotive industry,\u201d Mackay said. \u201c<\/p>\n\n\n\n The government is saying you get all these benefits if you manufacture here,\u201d he said of production rebates. <\/p>\n\n\n\n \u201cYour big challenge is that those benefits are not enough to offset the unpleasantness of making cars here.\u201d<\/p>\n\n\n\n Frank Stevens, Director: Automotive at the Department of Trade, Industry and Competition, told Bloomberg in an interview that the department was \u201creviewing the masterplan,\u201d a reference to the South African Automotive Masterplan, a policy framework that sets out tariff, tax, and export incentives and runs until 2035.<\/p>\n\n\n\n The outlook isn\u2019t all gloom, the CEOs said. Progress is being made\u2014albeit slowly\u2014on a pan-African free trade agreement that could open up enormous regional markets.<\/p>\n\n\n<\/a><\/figure>\n\n\n\n