SA automotive sector eyes R30bn boost through revival of local content programme

Minister of Trade, Industry and Competition (the dtic), Parks Tau, has announced the revival of the Automotive Production Development Programme (APDP) in a bid to offset the impact of 30% tariffs imposed by the United States on South African imports. 

The programme seeks to increase local content by 5%, a change that could unlock R30 billion in new procurement for the industry, more than the R4.4bn US export market.

Tau was speaking on the opening day of the National Association of Automotive Component and Allied Manufacturers (NAACAM) 2025 show on Wednesday.

“As the cornerstone of our manufacturing economy and contributing 5.2% to GDP and 22.6% of industrial output, this industry faces intersecting challenges that demand urgent collaboration,” Tau said.

“Yet within these challenges lie transformative opportunities to redefine and leverage our global competitiveness.”

Tau said this year’s NAACAM show holds particular significance as it aligns with the South Africa Automotive Masterplan 2035, showcasing the capabilities and resilience of the domestic automotive component manufacturing sector.

As it stands, the South African automotive industry directly employs around 115 000 people, with more than 80 000 of those roles situated in component manufacturing.

However, Tau said the sector was confronting a stark reality as domestic sales of locally produced vehicles plummeted to 515 850 units in 2024, far below the South Africa Automotive Masterplan 2035 target of 784 509.

Importantly, he said that 64% of vehicles sold domestically were imports, eroding local production scales.

Adding to these challenges, Tau said local content has stagnated at 39%, significantly below the desired 60% target, while US tariffs now significantly impacting South Africa's R28.7bn automotive exports.

“These pressures have triggered 12 company closures and over 4 000 job losses in two years. The erosion of the industrial value of the sector is exemplified by recent suspensions at Mercedes-Benz and other Original Equipment Manufacturers,” Tau said.

“A 5% increase in local content would unlock R30bn in new procurement, dwarfing the R4.4bn U.S. export market. To achieve this, we must act collectively to address some of the bottlenecks to growth,” he said.

“In this regard, the Department of Trade, Industry and Competition is reviewing the APDP as a comprehensive way of responding to the challenges the sector is facing, but also to ensure that we see regular growth in the sector to meet the goals of the Automotive Masterplan.”

Among the reforms being considered is a restructured incentive framework that will shift duty credits to reward manufacturing rather than merely assembly.

The dtic is keen on prioritising the benefaction of critical minerals and metals as part of its Critical Minerals and Metals Strategy, highlighting the production of high-value components for New Energy Vehicles, such as fuel cells and batteries.

Meanwhile, Standard Bank Group executive head of international trade at Business and Commercial Banking, Luthando Vuba, said the African Continental Free Trade Area (AfCFTA) was unlocking unprecedented opportunities for South African manufacturers and suppliers to deepen their presence in high-growth markets across the continent.

Vuba said emerging automotive hubs in Morocco, Nigeria, Ghana, Kenya and Egypt were driving demand for South African components, from engine parts and tyres to Electric Vehicles-related technologies.

In 2023, Africa imported R42.8bn worth of South African automotive components, making it the country’s second-largest regional export destination after the European Union. 

“Exporters will need the tools to diversify markets, strengthen supply chains and stay competitive in a rapidly changing environment. The continent's abundant natural resources and strategic positioning in the global supply chain, provides a unique opportunity for a transformation of the sector,” Vuba said.

“We hold vital raw materials that are essential for modern automotive manufacturing, and these include copper, cobalt, bauxite, and lithium, positioning Africa as a crucial player in the global automotive ecosystem.” 

BUSINESS REPORT