While domestic factories achieved record vehicle exports in 2025, senior executives from Ford, Toyota, BMW and Isuzu have warned that the country’s manufacturing base faces acute vulnerability.
Both realities hold true simultaneously because today’s shipments reflect investment commitments made years ago. The urgent question now centres on how South Africa wins the next round of global model allocations as the transition towards cleaner mobility accelerates.
Preferential access to European markets has anchored the local assembly model for decades. In 2025, the European Union and the United Kingdom absorbed 80.3 per cent of South Africa’s light-vehicle exports, totalling 332,695 units.
As those destinations tighten emissions rules and rival hubs such as Thailand negotiate their own European trade deals, tariff preferences offer diminishing shelter. Multinational parent companies assess factories across continents on total delivered cost, weighing energy, labour, logistics and supplier depth alongside market access.
Faltering factory competitiveness
Inside global boardrooms, South African plants vie directly with sister facilities abroad for capital and future vehicle lines. Domestic infrastructure bottlenecks make that contest steep.
Official transport records show national rail freight volumes fell from 226 million tonnes in 2017/18 to 149.5 million tonnes in 2022/23, pushing cargo onto congested roads and straining ports.
Electricity tariffs have also climbed sharply, with regulators approving a 12.74 per cent increase for direct Eskom customers from April 2025. Although some dramatic cost figures cited in industry debates lack verified public baselines, the underlying operational strain is unmistakable.
Supply-chain economics compound these pressures. Original-equipment component imports by South Africa’s seven vehicle manufacturers reached R151 billion in 2025, exposing assembly lines to currency swings and shipping delays.
Localising parts production can trim those expenses once suppliers achieve sufficient scale. Andrew Kirby, President and CEO of Toyota South Africa Motors, captures this commercial reality succinctly: “We keep coming back to it. It’s all about volume,” he argues.
Expanding trade across Africa offers a promising avenue to build volume over time. Billy Tom, President and CEO of Isuzu Motors South Africa, highlighted the urgency for local producers: “I think the biggest worry is [that] we’re also going to miss out on the continent.”
Regional growth nevertheless demands realism. South African plants exported 35,728 vehicles to African destinations in 2025, a fraction of European shipments, constrained by used-car imports, scarce consumer finance and border delays. Defending European export access while steadily cultivating African demand remains essential.
Public subsidies versus plant flexibility
Adapting factories for cleaner powertrains calls for commercial pragmatism. Dedicating entire local plants exclusively to battery-electric cars carries heavy risk while domestic charging networks and buyer appetite remain nascent.
Peter van Binsbergen, CEO of BMW South Africa, outlines a compelling operational path: “I think we’ve got to think about multi-purpose factories here that can produce ICE and plug-in hybrids and BEVs.” BMW’s Rosslyn facility illustrates this versatility in action, assembling internal-combustion models alongside the X3 plug-in hybrid for global export on one modular line.
Where industry advocacy and public-interest scrutiny diverge is over how generously taxpayers should underwrite the transition.
Manufacturers have long lobbied for broader production grants and consumer rebates, arguing that projects such as local battery assembly struggle commercially. Van Binsbergen states the industry’s case plainly: “We need demand-side incentives in South Africa if we want BEVs to take off.”
Policymakers should test those requests rigorously. Pretoria has already legislated a 150 per cent tax deduction for qualifying investment in battery-electric and hydrogen vehicle production from March 2026.
Extending fiscal support further into showroom rebates or hybrid subsidies requires transparent cost-benefit evidence, especially since retail subsidies can stimulate vehicle imports alongside domestic output. Every rand spent on purchase rebates carries a real opportunity cost for strained public finances.
Lasting security for South African carmaking rests on disciplined priorities. Restoring reliable rail, efficient ports and competitive electricity will lift every manufacturer and component supplier across the economy.
Paired with targeted, conditional industrial support where public returns are clear, stronger infrastructure gives local plants their best chance of earning future investment.