A lack of scale in the SA market, declining local production, an over reliance on certain global regions and the need for policy strengthening.
These are among the key factors that need to be analysed, interrogated and improved if SA intends to maintain its dominance in the African automotive sector, industry leaders say.
The key pillars referred to by Volkswagen Group Africa (VWGA) managing director Martina Biene as the “four forces at our crossroads” were discussed during the company’s annual indaba hosted at the Kariega plant on Wednesday.
Biene, who is also the president of the African Association of Automotive Manufacturers (AAAM), said these points had been identified across all original equipment manufacturers in SA, with them “all singing from the same hymn sheet”.
Meanwhile, on the other side of the metro a similar discussion was held at Isuzu.
Isuzu Motors South Africa president and chief executive Billy Tom said the country should leverage its Brics alliances to drive industrial expansion, both domestically and across the African continent.
SA’s automotive industry has long been one of the country’s most important manufacturing pillars, with Nelson Mandela Bay at its centre.
However, local production has declined.
The shift has been driven largely by a surge in imported vehicles, particularly lower-priced models from China and India, which have rapidly gained market share.
SA automakers also face pressure to transition to new energy vehicles.
Manufacturing costs have increased due to unstable electricity supply, with port logistics issues causing further problems.
The metro hosts several vehicle manufacturers and an extensive supplier network that supports thousands of direct and indirect jobs.
Back at VWGA’s indaba, Biene described 2026 as a make-or-break year for the group.
She said though they were not giving up hope, with OEMs, unions and several other roleplayers all aligning with regard to tackling issues affecting the growth of the industry, a lack of political urgency had continued to hinder progress.
“I even wrote to the president before Christmas to raise these concerns ... as headquarters need to see progress in policy,” Biene said.
“And while we may be able to pitch a good business proposal, there are many more markets with good business proposals across the world.”
Meanwhile, speaking at the 2026 IMSAf (Isuzu Motors South Africa) Address at the company’s Struandale manufacturing plant, Tom said consumers needed cars and SA needed investment.
“I don’t want to see a situation where we’ve been manufacturing cars for 100 years, and we miss the point of growing,” he said.
“I want to see a situation where we not only remain seven manufacturing OEMs, but we become 50.
“The continent calls for that.
“We need to create an environment where people who have invested feel safe, so that people don’t have a free pass when it comes to bringing vehicles into the country.
“Create an incentive for people to have businesses on the continent that have barriers.
“I also don’t want this to be seen as a crybaby who wants to be protected.
“Make it a point that there is fairness in the system.
“We belong to certain economic groupings.
“The question we would ask ourselves is whether those groupings are benefiting us? If not, what?
“We are in Brics.
“Let’s look at what it is that we do in Brics.
“How can we do more together?
“But we are on the African continent.
“How can we become more?”
Tom was responding to questions about the impact of cheaper Chinese vehicles on local manufacturers.
Biene, meanwhile, said strengthening local procurement and ensuring investment came in the form of attracting manufacturers who would assemble completely knocked down (CKD) instead of semi-knocked down (SKD) facilities.
She said some of the key differences included set-up costs which were about R100m for an SKD facility as opposed to R3bn-R11bn, while CKD was able to sustain eight jobs for every one in an SKD plant.
“Over the past 19 years, CKD share is down 23% to 33%.
“Rapid growth of vehicle imports from China and India is displacing locally manufactured vehicles.”
She proposed that the Automotive Investment Scheme and incentives be reformed to make the market more competitive.
She said CKD transition was essential to safeguard the auto industry and supplier base, proposing that policies be put in place to eliminate SKD assembly, prohibit new entrants and phase out existing operators within two years.
“In SA, there is no need for long testing phases through SKD as the systems have already been tested over decades.”
Tom said import-heavy sales continued to influence the market, particularly affordable vehicles from China and India.
“We’ve seen that growth of those imported vehicles leading the charge, and it must be noted that though the industry is seeing growth, today one in three sold is produced locally.
“Twenty-five years ago, over 80% were produced locally.
“That number has now changed, and it’s becoming a bit of a concern because the content of vehicles imported is a lot bigger.
“Local production has stagnated to below pre-Covid-19 levels, which is a bit of a concern because it’s quite a big employer.”
Biene echoed Tom’s point regarding pre-Covid levels.
“Exports continue to rise while domestic sales are declining.
“Exports to Europe doubled since 2010 while other regions halved.
“And exports into Africa reduced from 17% to 7%.”
In 2025, VWGA had its third-highest volume to date at 156,837 units, of which 76% were exported.
And about 20,000 fewer units are expected to be produced in 2026.
VWGA is celebrating its 75th anniversary of operating from Kariega in 2026.
In January, trade, industry and competition deputy minister Zuko Godlimpi said the country was working to de-risk SA’s dependence on the US market and other traditional markets.
On the Brics bloc, Godlimpi said it consisted mostly of middle-income countries.
“Our economic profiles are pretty much the same.
“We are all trying to claim almost a similar share of the global export markets, which means sometimes we will be competing directly with each other, and that creates a little bit of tension, not conflict as such.”
With geopolitical tensions, particularly between SA and the US, Tom said the country was unlikely to get any big contracts soon.
“Whilst our success is global, it is being pioneered, most notably right here in Africa,” he said.
“At Isuzu SA, our primary focus area is Africa. So whatever we build, it’s built for Africa.
“If you look at the geopolitics we’re experiencing, I’m not sure if there’s any big global contract that’s gonna be coming our way.
“The days of big contracts are probably numbered because of geopolitics.
“We are fortunate that our business was mainly geared towards Africa.
“Africa is our strategic focus area, and that commitment is paying off in real time.
“We have witnessed a remarkable 24% leap in regional performance, with 29,000 units sold in just six months, and we are firmly on track to hit 56,000 units across the continent by year’s end.
“Our Africa First strategy is not just a plan, it is working.
“We are being supported by significant macro-economic tailwinds, as easing monetary policies, including a series of interest rate cuts that make our products more accessible to a broader range of customers.”
Biene said VWGA was not particularly affected by US tensions, with its main export market being Europe for at least the next few years until about 2035.
The group reiterated it had turned its focus to Africa for the sale of its internal combustion engine vehicles and establishing new markets.
Biene said for SA’s automotive sector to truly excel, the country and the continent required a competitive new energy vehicle (NEV) environment.
“The lack of a comprehensive policy framework is constraining the NEV market development and local NEV investment.
“SA’s slow and uncertain transition to NEVs compounds the industry’s challenges.”
She proposed that finalising legislation for NEV investment support be a priority and called for the building of the battery value chain by supporting local battery assembly and accelerating critical mineral beneficiation, among other factors.
Tom said the most important factor for them was keeping jobs.
The company employs 1,352 workers.
“We are in a situation where we’re losing jobs, where there is a lot of talk about the industry,” he said.
“I was head of Naamsa for two years, and we’ve been talking about the changes the industry is experiencing and to us.
“This is a living example of how to reset a business, because when we were closed, I think people wrote obituaries, people started saying it’s a matter of time before this business closes, but typical to the nature of South Africans, we are very resilient.
“Isuzu really was a big concern, and we’ve worked our way, and I think there’s a lot of stability in the investment.”
Though Isuzu is best known for truck manufacturing, bakkies account for 47% of its revenue.
“Our light commercial vehicle segment is anchored by the legendary D-Max as well as the versatile M-UX, which is currently primarily the engine driving our global growth,” Tom said.
“We have significantly exceeded our initial expectation by reporting 123,000 unit sales worldwide in the first half of the year alone.
“On the back of this exceptional performance, we’re confident that our full-year target of 258,000, which represents a substantial 12% increase over our original projections, will be achieved.
“This performance is more than just growth.
“It is a clear demonstration of the momentum we are building in our core markets.”
Tom said Africa and the Middle East were the growth engines.
“In the Middle East, H1 [first half of the year] sales jumped from 16,000 to 24,000.
“In Africa, we saw a robust increase from 8,000 to 13,000.
“Africa is no longer just a promising market. It has become a primary driver of Isuzu’s international growth.
“For us in SA, we can see again how important Africa has become.
“We’ve moved from 19,000 units to 26,000, and with the African Free Trade Area, we see a big opportunity.
“As global protectionism increases in traditional markets, Africa offers us a self-sustaining ecosystem where internal trade can thrive.”
