Auto industry continues to drive investment, jobs and innovation

Dear Fellow South African, 

South Africa has a well-established auto manufacturing industry that is more than a century old. It has proven to be one of the most resilient sectors of our economy. 

Since the first assembly plants were established in the Eastern Cape in the 1920s, the auto industry has grown to become the largest manufacturing sector in the country. South Africa’s role in global vehicle manufacturing has expanded and grown. 

Auto companies like Toyota, Ford, Nissan, Volkswagen, BMW and Mercedes-Benz have plants here in our country that produce vehicles for the local market and for export to many other countries in the world. 

 A number of these companies continue to expand their investments in our country. The sector currently supports more than 115,000 direct manufacturing jobs and more than 500,000 across the value chain. It contributes approximately 5.3% to GDP. 

However, the industry is under growing pressure. The introduction of stricter vehicle emissions regulations in leading export destinations such as the European Union, as well as new tariffs from the United States, are expected to have a significant impact on the sector. 

With exports currently accounting for approximately two-thirds of local vehicle production, it is critical that we strengthen the sector to not only overcome current headwinds, but to ensure its long-term sustainability. 

Last week, I attended the launch of BMW’s new X3 plug-in hybrid at the company’s Rosslyn plant in Tshwane. South Africa is the exclusive global production site for this model. The shift from internal combustion engines (ICE) towards hybrid and electric vehicles (EVs) in a number of markets means that green mobility is becoming increasingly important for automotive manufacturers.

The latest investment by BMW following their pledge at our South Africa Investment Conference in 2023 is a welcome signal to investors that South Africa remains a favourable place to do business. As Government, we are working to ensure there is an enabling regulatory and policy environment to support the growth of this burgeoning industrial activity. 

Our five South Africa Investment Conferences, where we invited companies to make investment pledges that are translated into actual investments, is an important platform for companies to declare their investment intention to South Africa and demonstrate that South Africa is an investable market.

Government support to the car manufacturing industry through the Automotive Production and Development Programme will position South Africa as a key global manufacturing base for vehicles of the future. 

This isn’t just critical to the sustainability of the sector, but to growing the workforce and skills of the future. 

BMW, for example, has a training academy that focuses on competencies like EV assembly and robotics. The company is also a founding partner of the Youth Employment Service (YES), which was established between Government and the private sector to create work experience opportunities for young people.

This initiative introduces young people into the world of work for a year of experience and training. Often if they meet the standards of the participating company they stand a good chance of being absorbed as employees of the company. BMW’s participation in this programme has supported more than 3,500 young people with training and work placements across all nine provinces. 

We have invited more companies to participate in the Youth Employment Service (YES) programme as broadly as BMW has done.

We are working to ensure that more production takes place locally, creating more employment. To do this, we must upskill our workforce and facilitate the creation of new companies across the value chain.

As such, we welcome initiatives by the sector to support skills development through initiatives such as the Centre of Excellence at the Tshwane Automotive Special Economic Zone. This centre has an artisan training academy, an incubation hub and a science, technology, engineering and mathematics programme for high school learners. 

There are also a number of industry-driven training initiatives focusing on technical and artisanal skills, and deepening collaboration between Government departments, vocational colleges and companies to grow a new skills pipeline.

Protecting existing jobs in the sector is paramount, particularly in the light of the looming US tariffs. The need to diversify our export base has become all the greater. We are committed to working with the sector to expand its continental footprint, building on the already strong growth of exports to the SADC region and leveraging the trade relationships that exist. 

Amid these challenges, South Africa’s auto industry is making the investments needed to build resilience, protect jobs and lead the way into a new era of green mobility. 

With best regards,