Trade and Industry Minister Parks Tau at the opening of the National Association of Automotive Component and Allied Manufacturers show in Gqeberha on Wednesday. (Photo: David Dettman) 
While the automotive industry in South Africa has already seen hundreds of millions of rands in contracts fall by the wayside after the imposition of US export tariffs of 30%, Minister of Trade, Industry and Competition Parks Tau said there were new plans to ensure the sector’s sustainability.
“The erosion of industrial value of the sector is exemplified by recent suspensions at Mercedes-Benz and other original equipment manufacturers,” Tau said in his speech at the opening of the National Association of Automotive Component and Allied Manufacturers’ (Naacam) show in Nelson Mandela Bay on 13 August 2025.
Read more: Trump tariffs jeopardise future of decades-old Nelson Mandela Bay engineering firm
However, the minister still seemed full of hope that all is not lost.
“This province [the Eastern Cape], producing 46% of South Africa’s vehicles and 54% of exports, epitomises our potential. Therefore, it is incumbent upon all of us to reignite the collective ambition that drives Naacam’s advocacy. With South Africa chairing the G20, our automotive sector can model African industrial resilience: rooted in localisation, powered by innovation and fortified by equity,” Tau added.
Conference organisers then had to be quick to issue corrections after the next speaker, Minister of Labour Nomakhosazana Meth erroneously announced in her speech that Volkswagen was closing in Kariega (formerly Uitenhage).
The company is one of the biggest employers in the metro and its closure would be disastrous for the region.
The company also denied it was closing. Daily Maverick sought an explanation for the faux pas from Meth’s communication staff but received none. The mistake also occurs in her written speech.
Meanwhile, Tau said the conference was taking place at a “defining moment for South Africa’s automotive sector.”
He explained that the automotive sector employs 115,000 South Africans directly, with 80,000 working in the component industry.
“However, we confront a stark reality: domestic sales of locally produced vehicles plummeted to 515,850 units in 2024, far below the South Africa Automotive Master Plan 2035 target of 784,509. Importantly, 64% of vehicles sold here are imports, eroding local production scales. Compounding this, local content remains stagnant at 39%, well short of the 60% target, while US tariffs now significantly impact our R28.7-billion automotive exports,” he added.
Tau said a 5% increase in local content would unlock R30-billion in new procurement, dwarfing the R4.4-billion US export market.
Read more: Everything you need to know about the US-SA tariffs
“To achieve this, we must act collectively to address some of the bottlenecks to growth. In this regard, the DTIC is reviewing the Automotive Production Development Programme 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 Master Plan,” he added.
“Some of these reforms include the incentive structure and shifting duty credits to reward manufacturing instead of assembly credits.
He added that the beneficiation of platinum group metals, copper and manganese for high-value new energy vehicle components such as fuel cells and batteries would be prioritised in the country’s new minerals strategy.
“Isondo Precious Metals’ fuel cell plant in the OR Tambo SEZ proves this viability,” Tau added.
The minister said Eastern Cape pioneers [based in Nelson Mandela Bay] including S4 and Jendamark demonstrated how AI and automation could future-proof operations. Their presence at this show underscored scalable solutions.
“In decarbonisation, Borbet SA’s 20-year solar energy commitment and Malben Engineering’s green steel pilot project align with global carbon rules reshaping trade,” he added.
He said that in December the department gazetted the Taxation Laws Amendment Act to introduce a 150% capital allowance for qualifying investments in electric vehicles and hydrogen vehicle production.
“It covers assets such as buildings, plants and equipment brought into use between 1 March 2026 and 1 March 2036.”
He further called for support for his controversial Transformation Fund.
“We have walked a long journey with the auto sector on transformation. It therefore goes without saying that inclusion drives growth. The South Africa Automotive Master Plan 2035’s target of 130 new black-owned manufacturers is advancing, with 26 black-owned MSMEs [micro, small and medium enterprises] exhibiting here today – supported by the Automotive Industry Transformation Fund and OEM [original equipment manufacturers] partnerships like Toyota-Isuzu’s supplier development programme,” he added.
“As you would agree, the pace does need to be hastened. To this end we are hopeful that the industry will support the endeavour of the Transformation Fund that we are pursuing at the DTIC with the view to enhance overall transformation through enterprise and supplier development funds.
Read more: ‘Madness’ or ‘necessary intervention’? Parks Tau’s R100bn transformation fund draws mixed reactions
As a government we are also working hard to eliminate compliance burdens and reduce red tape which inhibits investment into our country’s automotive sector. Our policy response is accelerating and we plan on introducing an Omnibus (General Laws Amendment) Bill which looks to fast-track high-impact investments and projects within 90 days.
“This is but one of the ambitious plans we have for the medium term. We will also, through the International Trade Administration Commission, look at the impact of imports into the country and the impact they are having on local production. We want to grow the sector, so our first option must not be to wield a stick, but rather offer a carrot to these companies to attract more investment into the country, thereby increasing the value-add of, particularly, our component manufacturers,” he added.
Meanwhile, Meth painted a dark picture for jobs in the manufacturing sector.
Read more: Eastern Cape on its knees, Numsa warns government of jobs ‘catastrophe’
“Without decisive action our manufacturing base will continue to erode,” she said.
Perhaps the most concerning signal had come from the steel sector.
“ArcelorMittal South Africa has confirmed plans to shut its long steel operations in Newcastle and Vereeniging – the only domestic producers of speciality long steel used in vehicle component manufacturing. These plants do not just supply steel; they supply the backbone of our automotive industry. They produce around 70 kilotons of speciality steel every year, meeting stringent quality and safety standards that imported steel often cannot match without significant cost.
“If these closures proceed, we are looking at the loss of more than 3,500 direct jobs in the steel sector, with ripple effects across the automotive supply chain that could easily push the total job losses above 13,000 in the short term. The cost of replacing this local supply with imports would be up to 25% higher, threatening local content requirements under the Automotive Production and Development Programme and risking noncompliance with Rules of Origin in our trade agreements.
“The government has not stood by. Through InvestSA, the Industrial Development Corporation has extended a R380-million lifeline to keep these operations running while we work with industry to find sustainable solutions.”
Luthando Vuba, executive head of international trade at Business and Commercial Banking, Standard Bank Group, said that according to Naacam data published in May 2025, motor vehicle, parts and accessories manufacturing contracted by 6.7%.
“Yet sales grew 3.9%, supported by robust aftermarket demand, increased exports to non-US markets and steady performance of key model lines. In 2023, Africa imported R42.8-billion worth of South African automotive components, making it the country’s second-largest regional export destination after the EU,” he said.
Vuba added that Africa holds vital raw materials that are essential for modern automotive manufacturing, including copper, cobalt, bauxite and lithium and that this positions Africa as a crucial player in the global automotive ecosystem. DM