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South Africa's automotive manufacturing sector is slowly recovering to pre-pandemic levels, but industry association Naamsa said carmakers were still facing many headwinds.
Naamsa issued a detailed overview of the country's automotive industry over the weekend highlighting the industry's “rocky road to recovery” after the Covid-19 global shutdown.
It said while the industry's recovery continued last year, it was at a slower pace than in 2021, and many key indicators remained below pre-pandemic levels.
“The export value of vehicles and automotive components increased by R19.8 billion, or 9.5%, from R207.5 billion in 2021 to a record R227.3 billion in 2022, comprising 12.4% of total South African exports.”
The broader automotive industry's contribution to GDP was 4.9%, while SA's automotive trade "under the APDP2, amounting to R435.0 billion in 2022, comprised 16.5% of South Africa's total trade GDP, up from 15.8% in 2021."
Meanwhile, Naamsa said the global automotive industry is at a crossroads “at the moment” after the UK and European Union announced bans on vehicles using internal combustion engines from 2030 and 2035 respectively.
The Association said motor manufacturers would have to accelerate the development of New Energy Vehicle business, while at the same time running the legacy business.
“Considering that 4.4% of the total automotive component export value, and three out of every four vehicles exported were destined for the EU and the UK in 2022, developments in the region have a measurable and direct impact on the South African automotive industry.”
Naamsa said for South African carmakers to achieve this duality, they, along with component suppliers, will have to make dramatic changes and reshape their business models, which will also require significant investment.
“The imminent demand for eco-friendly vehicles in traditional markets means that the transition to NEVs is inevitable for the export-oriented domestic automotive industry, and it will need to commence with making significant investments in innovation and NEV technology,” according to Naamsa.
The Association said the future of the South African industry depends on all stakeholders, policymakers, businesses and consumers advancing to the same destination, thereby changing the way the world drives.
