One aspect that distinguishes the motor industry from other industrial sectors is the importance of government policies in steering its development. Since the implementation of the Motor Industry Development Programme (MIDP) in September 1995, the South African automotive sector has grown in stature to become the leading manufacturing sector in the country’s economy. Vehicle exports under the MIDP, the Automotive Production Development Programme (APDP) and APDP Phase 2 (APDP2), from 1995 up to 2022, totalled 5 641 644 units of which 3 848 480 passenger cars, 1 770 617 light commercial vehicles (bakkies), 19 516 heavy commercial vehicles and 3 031 buses. The export value of vehicles for this period amounted to R1 548,0 billion while the export value of automotive component exports amounted to R892,6 billion. The significant export growth has been accommodated by major investments in best practice assets and state-of-the-art equipment, skills upgrading, productivity gains and upgrading of the whole automotive value chain.
Source: naamsa, 2022
Manufacturing has historically been credited as a key driver of higher-value job creation and an increase in living standards globally. In South Africa, the manufacturing sector has been vital to the country’s economy and, although far less than in previous years, manufacturing still contributes significantly towards South Africa’s gross domestic product (GDP). As the largest manufacturing sector in the country’s economy, a substantial 21,7% of value addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing in 2022, while the broader automotive industry’s contribution to the GDP comprised 4,9% (2,9% manufacturing and 2,0% retail). The export value of vehicles and automotive components increased by R19,8 billion, or 9,5%, from the R207,5 billion in 2021 to a record R227,3 billion in 2022, comprising 12,4% of total South African exports. Vehicle exports increased by 53 765 units to 351 785 units in 2022, up from 298 020 units exported in 2021, while the vehicle export value increased by R18,7 billion from the R138,3 billion in 2021 to R157,0 billion in 2022, the highest vehicle export value on record. Automotive component exports reflected an increase of R1,1 billion from R69,2 billion in 2021 to a record R70,3 billion in 2022. The number of domestic automotive industry export destinations in 2022 comprised 152 countries, similar to 2021, with the export value more than doubling in the case of 29 of these countries from 2021 to 2022.
The Original Equipment Manufacturers (OEMs) building cars and commercial vehicles, together with their suppliers and dealers, generate significant revenue for the South African economy and employs more than 110,000 people across its various tiers of activity [from component manufacturing to vehicle assembly]. Combined with the industry’s strong multiplier effect, the automotive industry is responsible for more than a million jobs across the SA economy’s formal sector.
Automotive manufacturing depends on thousands of companies supplying parts, components, and materials, as well as a vast retail and vehicle maintenance network of dealers. No other industry in South Africa has such an expansive reach across the country, delivering economic benefits and creating jobs in so many different sectors. With its linkages throughout the economy, the country’s automotive industry is a turbo-charged engine for the manufacture and export of vehicles and automotive components to world markets. In South Africa, the automotive industry continues to reflect the power of combining good industrial policy and foreign investment and is not only the backbone of the industrialisation drive in South Africa but is also key to ensuring greater economic growth.
In 2022, the beleaguered global automotive industry, already reeling from the supply chain and semiconductor shortage crises, witnessed further shocks due to the geopolitical conflict between Ukraine and Russia. The entire automotive value chain, including raw material sourcing, component production, vehicle manufacturing, and sales, was impacted. Although global vehicle production increased by 6,0% to reach 85,02 million vehicles in 2022, up from the 80,21 million units produced in 2021, it was still 7,7% below the pre-pandemic level of 92,12 million vehicles in 2019. In 2022, global new vehicle sales totalled 81,6 million units, 1,4% lower than the 82,8 million units sold in 2021 and still 10,6% below pre-pandemic levels.
South African vehicle production increased by 11,8%, from 499 087 units produced in 2021 to 555 889 units produced in 2022, exceeding the global year-on-year increase in global vehicle production of 6,0% in 2022. The country’s global vehicle production market share thus increased to 0,65%, but its global vehicle production ranking declined to 22nd, as Malaysia, ranked at number 20, surpassed South Africa’s in the global rankings. In terms of global LCV production, South Africa was ranked 16th with a market share of 1,1%. South Africa remained the dominant market on the African continent, and accounted for 555 889 vehicles, or 54,4% of the total African vehicle production of 1 022 783 vehicles in 2022.
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