The automotive industry in South Africa – Everything you need to know

One of the top manufacturing industries in one of Africa’s top economies… this is how one might describe the automotive industry in South Africa.

It is one of the most significant contributors to South Africa’s economy, accounting for between 5.2% and 7.5% of GDP and representing approximately 33% of all value added within the domestic manufacturing sector.

In this article, our South African experts drive you through the automative industry in South Africa, including investment advantages and local complexities to look out for.

The South African automotive industry’s real power

Whether measured by output, employment, or strategic importance, the automotive industry stands as the largest manufacturing sector in South Africa. It is, in many ways, the bedrock of South Africa's broader industrialisation plans.

South African vehicle exports reached a historic record of 414,268 units in 2025, a 5.9% increase from 2024, despite challenges with US tariffs. Over 80% of exports are destined for Europe.

In 2025, it contributed approximately 5.3% to national GDP, comprising 3.2% from manufacturing and 2.1% from retail activity, and continued to support over 500,000 jobs across the value chain despite a challenging operating environment.

Currently, the the industry is upheld by the presence of the 7 OEMs (Original Equipment Manufacturers): BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen.

Policy Support & the SA Automotive Masterplan

The industry's growth has not happened in isolation. It also owes its success to other forces.

The South African government has played an active role in supporting the industry over several decades, beginning with the Motor Industry Development Programme from 1995 to 2012, followed by the Automotive Production and Development Programme, and now the South African Automotive Masterplan 2035 (SAAM 2035), which sets the long-term direction for the sector.

Advantages for businesses

Businesses operating in the industry can offset vehicle and component duties through duty rebate systems designed to support both competitiveness and sustainability.

To strengthen supply capabilities, the local government has also backed the establishment of the Automotive Supply Chain Competitiveness Initiative (ASCCI), developed in collaboration with industry stakeholders.

Provincial and local governments have added further layers of support to automotive firms operating within their jurisdictions.

At the same time, the industry has been progressively exposed to international competition through a reduction in import tariffs. This has required domestic manufacturers to continually upgrade their efficiency and output quality.

Geographical Manufacturing Clusters

South Africa's automotive manufacturing activity is concentrated in 3 principal geographical clusters, each home to major global original equipment manufacturers.

1. Gauteng hosts BMW, Nissan, Ford, Iveco, BAW, and MAN, along with the majority of the country's truck and bus manufacturers.
2. KwaZulu-Natal is home to Toyota, Mahindra, and Volvo.
3. The Eastern Cape hosts Volkswagen, Isuzu, Mercedes-Daimler, and Mitsubishi.

These clusters have developed deep integration with local component suppliers and logistics networks. This has reinforced the industry's position as a regional automotive expert.

Why the South African automotive industry particularly?

While other African countries like Morocco have well-developed automotive industries, South Africa offers a compelling combination of factors for international automotive manufacturers and suppliers.

1. Well-developed infrastructure

The country's well-developed road and port infrastructure, particularly through the ports of Durban, Port Elizabeth, and East London, provides reliable access to both regional and global markets. The existing presence of major OEMs such as BMW, Toyota, Volkswagen, and Ford has created a mature supplier ecosystem, meaning new entrants can integrate into established supply chains rather than building from scratch.

2. Trade agreements

The country's trade agreements are appealing. South Africa benefits from preferential access to the European Union under the EU-SADC Economic Partnership Agreement, as well as to the United States under the African Growth and Opportunity Act (AGOA), making it an attractive export base for vehicles and components destined for those markets. The African Continental Free Trade Area (AfCFTA) makes it an even more advantageous deal, opening up preferential access to markets across the continent.

3. Labour costs

Labour costs, while rising, remain competitive relative to established automotive manufacturing hubs in Europe.

Potential difficulties and complexities

Expanding into South Africa's automotive sector is not without its challenges. Energy supply remains the most significant operational risk. Load shedding, the system of rolling power cuts, has been a persistent feature of the business environment and can severely disrupt manufacturing lines.

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