South Africa’s automotive industry at a crossroads

Source: Unsplash

One of the central themes of a recent conversation was the potential of Africa as the next frontier for the automotive industry.

With a new vehicle market currently around 1.3 million units annually, expectations are that this figure could rise to between three and five million by 2035.

The African Continental Free Trade Agreement (AfCFTA) is a significant enabler in this regard, particularly as it pertains to the automotive sector.

This growth is not only important for the broader African continent but especially critical for South Africa, which has long been a hub for automotive manufacturing.

For South Africa to capitalise on this opportunity, we must focus on three critical areas: skills development, infrastructure, and government collaboration.

Without targeted action in these areas, we risk missing out on the tremendous potential that Africa holds for automotive growth and industrialisation.

Skills development: the foundation for growth

South Africa’s automotive sector is globally competitive, largely thanks to the skill level of our workforce. But we can’t become complacent.

The sector is evolving rapidly, and the skills required to operate and maintain today’s advanced, automated production lines are vastly different from those needed a decade ago. This necessitates a continuous focus on upskilling our workforce.

In particular, we need to reinvigorate technical training in schools and prioritise vocational education. There has been a shift toward academic degrees at the expense of artisanal and technical skills, which are the backbone of any manufacturing economy.

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For instance, we face shortages of essential trades such as fitters and turners, which hampers our ability to maintain and grow our manufacturing base.

The automotive sector, with its well-paying and skilled career opportunities, is ideally positioned to play a leading role in this effort.

By strengthening technical education and fostering partnerships with educational institutions, we can ensure that our workforce remains competitive in a global market. This is not just a national imperative—it is a continental one, as Africa’s automotive value chain continues to grow.

Infrastructure and industrialisation

South Africa has been a key player in the development of AfCFTA’s automotive framework, which aims to enhance trade within the continent.

This agreement presents a significant opportunity for Africa to industrialise by participating in the global automotive value chain, moving beyond merely exporting raw materials.

To take advantage here though, we need to address infrastructure challenges, particularly logistics and supply chain inefficiencies. It’s not enough to mine raw materials — we must add value by developing manufacturing capabilities across the continent.

There is no reason why a country like Namibia, for example, cannot produce components for new energy vehicles by beneficiating its raw materials.

This is the essence of industrialisation: creating jobs and economic value from Africa’s natural resources.

At present, much of the demand for affordable vehicles in Africa is met by imports from more advanced economies.

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This trend must change. South Africa, as a leader in automotive manufacturing, has the responsibility to not only meet domestic demand but also export to other African markets.

However, this requires a renewed focus on building affordable vehicles locally. We must balance our production capabilities with the continent’s needs, ensuring that the benefits of industrialisation are shared across Africa.

The role of government and policy

One of South Africa’s key advantages in the automotive space has been the stability of our policy environment.

The South African Automotive Master Plan, which extends to 2035, provides a clear roadmap for the sector’s growth, with a focus on expanding into the African market and embracing new energy vehicles.

That being said, it’s time to revisit and review our policy framework to ensure it remains aligned with the evolving landscape.

While the objectives of the Master Plan remain sound, we need to reassess the enablers—those elements of policy that facilitate growth—to ensure they are still relevant and effective.

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The success of our policy framework has been its collaborative nature, bringing together government, industry, and labour.

This spirit of collaboration must continue as we navigate new challenges, such as the transition to new energy vehicles and the increasing demand for affordable mobility solutions.

Affordable mobility: A critical challenge

While mobility is a key driver of economic freedom and opportunity in Africa, South Africa and the broader continent face a significant challenge in providing affordable mobility solutions.

With the cost of living rising and incomes stagnating, the demand for affordable vehicles—whether two-wheelers or small cars—is growing rapidly. Studies show that by 2030, 51% of all mobility in Africa will be two-wheelers.

At present, South Africa is not producing enough affordable vehicles to meet this demand. We must address this gap by focusing on affordable mobility solutions that not only provide transportation but also create economic opportunities.

This is not just a question of manufacturing vehicles—it is about developing an ecosystem that supports mobility, from financing options to infrastructure development.

The road ahead

The automotive sector is at a crossroads. We face numerous challenges, from skills shortages to infrastructure bottlenecks, but we also have a tremendous opportunity to lead the continent into a new era of industrialisation and growth.

The African automotive market is poised for expansion, and South Africa must position itself to be at the forefront of this transformation.

This will require a concerted effort from all stakeholders. We must invest in skills development, upgrade our infrastructure, and ensure that our policy framework remains flexible and responsive to global trends.

Most importantly, we must collaborate across industries and borders to create a thriving automotive ecosystem in Africa.

The time to act is now. Let’s not allow this opportunity to slip away. Together, we can build a future where the African automotive industry is a global force, driving growth and prosperity for generations to come.