The South African automotive industry plays an instrumental role in South Africa’s economy. The country has capitalised on the wealth of experience brought about by the presence of all the major European, American and Japanese motor vehicle manufacturers. South Africa’s attractiveness as an investment destination of choice, and production base for products to be exported to global markets, has been well established. With its advanced infrastructure, diverse economy, sophisticated capital markets and developed manufacturing capacity, South Africa is the ideal location for any company aspiring to reach the continental market more effectively, both from a cost and logistical point of view.
The automotive industry is strategically placed in Gauteng – the country’s economic hub; the Eastern Cape – renowned for the largest Industrial Development Zone in the country; and KwaZulu-Natal – home to the largest port on the African continent. The automotive multinational corporations support the improvement of the country’s biggest socio-economic challenge – unemployment – and make a vital contribution to the social upliftment of the communities in the regional clusters where the industry is concentrated.
Automotive Industry’s Contribution To GDP
In 2020, the broader automotive industry’s contribution to the gross domestic product (GDP) stood at 4,9% (2,8% manufacturing and 2,1% retail), down from 6,4% in 2019, reflecting the severe impact of COVID-19 on automotive manufacturing and retail as a consequence of the country lockdown restrictions during the year. As the largest manufacturing sector in the country’s economy, a substantial 18,7% of value addition within the domestic manufacturing output was derived from vehicle and automotive component manufacturing activity, continuing to position the industry and its broader value chain as a key player within South Africa’s industrialisation landscape. The automotive sector remained one of the most visible sectors receiving foreign direct investments, with the seven OEMs investing a record R9,2 billion in 2020, while the component sector invested R2,4 billion in 2020. Investment at this scale is significant and will promote local value-addition, while importantly, technology is also embodied in the investment.