Speaking at a recent automotive event in Gqeberha, Andrew Kirby, President and CEO of Toyota South Africa Motors, emphasised that South Africa’s automotive industry has the potential to drive a new wave of industrialisation.

He set out a frank assessment of the country’s industrial decline and the strategic steps needed to restore manufacturing growth.

South Africa’s industrial performance – A decline in momentum:

Andrew began by highlighting that South Africa has steadily lost industrial ground. In 2000, manufacturing contributed 19% to the country’s GDP, but by 2024 this had fallen to 13%.

In contrast, he used Türkiye as an example where that country increased its manufacturing share from 19% to 22% over the same period. South Africa’s manufacturing value-added per capita dropped by 11% in two decades, while global peers such as Türkiye and India more than doubled theirs.

This decline, he explained, reflects stagnating productivity, shrinking output per worker and a greater reliance on raw material exports. Manufacturing’s weak performance has left the economy more vulnerable, even as strong sectors such as automotive, agriculture-processing and the chemical industry continue to show resilience.

The auto industry as a model for industrialisation:

Despite these challenges, the automotive sector stands out as a success story. In 2024, the industry contributed R171 billion in manufacturing value and sustained over 115 000 direct jobs. It accounts for about 5.2% of national GDP and half of all vehicle production in Africa.

South Africa produced around 600 000 vehicles in 2024, exporting nearly two-thirds of them. The country hosts seven global vehicle manufacturers and over 500 suppliers, underpinning one of the most sophisticated industrial ecosystems on the continent.

However, Andrew cautioned that while the foundations are strong, they are being tested by slow local demand, policy uncertainty and an overreliance on Europe as an export destination.

The four forces at a crossroads:

He framed the future of the industry around four “forces at our crossroads”:

• A limited domestic market: constrained by affordability and weak consumer confidence.
• Import substitution pressures: with the shift from completely knocked-down (CKD) to fully built-up (CBU) imports undermining local manufacturing depth.
• The new-energy vehicle (NEV) transition: slowed by policy ambiguity and delayed incentives.
• Over-concentration on export markets: particularly Europe, which pose a risk as regulations and technologies change.

These forces, he said, must be addressed through coordinated action between government and industry to unlock the next phase of re-industrialisation.

Economic headwinds and structural challenges:

Andrew noted that South Africa’s economy has grown by only 0.4% annually over the past five years, while unemployment has reached 33%. Consumer confidence remains subdued, squeezing vehicle affordability. The prices of entry-level cars have tripled over two decades, yet the ad valorem tax structure has not been adjusted, further limiting access to mobility.

Compounding this, the share of CKD assembly has dropped from 56% in 2006 to just 33% today. He warned that this decline threatens the local supplier base and job creation. “SKD may be cheaper,” he said, “but it is shallow. CKD is costly but transformative.”

Navigating the NEV transition:

The shift to new-energy vehicles represents both a challenge and an opportunity. Europe and the UK are phasing out internal combustion engines by 2035, with strict emission quotas and penalties. Without local NEV production, South Africa risks losing access to these lucrative export markets, Andrew said.

Globally, countries are incentivising electrification through subsidies, tax breaks and regulatory mandates. Andrew urged South Africa to follow suit. “We must urgently adopt and publish an inclusive NEV policy covering hybrids, plug-ins, battery electric and fuel-cell vehicles,” he said. “It is essential to drive demand, support manufacturing and secure future OEM allocations.”

Concrete actions for a “High Road” future:

Andrew’s vision for a high-road scenario is built on four practical actions: stimulating domestic demand, prioritising CKD over CBU imports, fast-tracking NEV policy implementation and diversifying exports beyond Europe.

He proposed aligning the ad valorem tax curve with current vehicle prices, encouraging local procurement by government and finalising regional trade frameworks such as the African Continental Free Trade Area’s automotive rules of origin. He also called for renewed engagement with the EU to maintain export competitiveness as NEV regulations evolve.

Envisioning a 20:20 Vision for Growth:

Andrew concluded with a tangible outlook: a 20% increase in domestic production combined with a 20% rise in exports could add R21 billion to manufacturing value and create more than 14 500 direct jobs. This would grow GDP by 0.3%, demonstrating the powerful multiplier effect of automotive manufacturing on the wider economy.

He emphasised that the industry already employs 115 000 people in vehicle and component production, while the retail and repair network supports a further 175 000 jobs. “A unified approach between government and industry,” he concluded, “is an imperative towards re-industrialising our future.”