South Africa’s automotive industry, a key pillar of the economy, faces unprecedented pressure. The US’s 30% tariff on local auto component exports, combined with domestic challenges like plant closures and slow economic growth, threatens an industry that contributes nearly 5% to GDP and sustains over 100,000 jobs in vehicle assembly and components.
At both the Naacam Show and Naamsa SA Autoweek 2025, industry leaders warned that these tariffs, combined with local challenges such as plant closures, sluggish economic growth, and rising input costs, are squeezing an industry that contributes nearly 5% directly to GDP and sustains over 100,000 jobs in vehicle assembly and components.
The BEE Chamber cautions that unless South Africa takes a strategic, transformation-driven approach, the ripple effects could spread beyond automotive assembly to steel, plastics, textiles, and logistics.
Yet, there’s also a path forward, one that lies in leveraging legislative support and embedding Enterprise and Supplier Development (ESD) into the industry’s recovery strategy.
AIS: The bridge between compliance and competitiveness
The Automotive Investment Scheme (AIS), a government incentive designed to attract investment in local manufacturing and exports, has become critical to keeping South Africa’s auto industry competitive in a protectionist global market.
To qualify for AIS support, automotive assemblers must hold a minimum Level 4 B-BBEE certification, a requirement that hinges on meaningful ESD compliance. In other words, transformation is not just a moral imperative; it’s now a commercial gateway to accessing the funding needed for survival and growth.
Enterprise and supplier development: building local strength
Meaningful ESD requires manufacturers to support and integrate Black-owned suppliers into their value chains. This shift reduces dependency on imports and strengthens local resilience by increasing the proportion of locally produced components in South African-built vehicles.
For instance, when a Tier 1 supplier partners with a Black-owned SME to produce specialised components, it not only meets B-BBEE scorecard targets but also contributes to the localisation goals of the South African Automotive Masterplan (Saam 2035), a key strategy for navigating tariff shocks and global trade disruptions.
From MIDP to Saam 2035: A policy evolution
South Africa’s automotive policy framework has evolved from the Motor Industry Development Programme (MIDP) of the 1990s, which opened the industry to global trade, to the Automotive Production and Development Programme (APDP), which incentivised local production.
Today, under APDP 2 and Saam 2035, the focus is squarely on transformation, innovation, and competitiveness. Targets include achieving 60% local content, doubling employment, and producing 1% of the world’s vehicles annually.
To meet these goals, local supplier development and skills transfer must be more than compliance exercises; they must be growth strategies.
A warning from recent closures
The recent closure of Goodyear’s tyre plant in the Eastern Cape and the production slowdown at Nissan’s Rosslyn facility highlight how vulnerable local operations are to global economic pressures.
If similar outcomes spread to the component sector, the knock-on effects could undermine steel producers, PVC suppliers, and logistics operators, intensifying job losses across multiple value chains.
Transformation as economic strategy
The BEE Chamber urges industry players to view transformation as a strategic tool, not a tick-box exercise. By integrating ESD into their operations, companies can maintain the B-BBEE levels needed for AIS funding, while strengthening their resilience against external shocks.
Transformation, when meaningfully applied, secures financial access, supply chain stability, and alignment with national policy goals under Saam 2035. It’s a chance for South Africa’s automotive industry to transform crisis into competitiveness.
