Ramaphosa Warns SA’s Auto Sector to Modernise and Broaden Exports in Face of US Tariff Risks

In his weekly newsletter on Monday, 28 July, the president emphasised that protecting existing jobs in the automotive sector is paramount, particularly in light of the looming US tariffs.

“The need to diversify our export base has become all the greater. We are committed to working with the sector to expand its continental footprint, building on the already strong growth of exports to the SADC region and leveraging the trade relationships that exist,” he said.

The president highlighted that South Africa’s automotive manufacturing industry, with roots dating back over a century, remains one of the country’s most resilient and impactful sectors.

According to the president, the industry has not only cemented itself as the largest manufacturing sector in South Africa but continues to evolve and contribute significantly to the economy.

“Since the first assembly plants were established in the Eastern Cape in the 1920s, the auto industry has grown to become the largest manufacturing sector in the country. South Africa’s role in global vehicle manufacturing has expanded and grown,” he said.

Major international auto brands, including Toyota, Ford, Nissan, Volkswagen, BMW and Mercedes-Benz, currently operate production plants in the country.

These facilities serve both the domestic market and international export destinations, with exports making up around two-thirds of local vehicle production.

“The sector currently supports more than 115,000 direct manufacturing jobs and more than 500,000 across the value chain. It contributes approximately 5.3% to GDP.”

Sustainability

However, he cautioned that the industry faces mounting pressures, including new emissions regulations in key markets such as the European Union and fresh tariffs from the United States.

“With exports currently accounting for approximately two-thirds of local vehicle production, it is critical that we strengthen the sector to not only overcome current headwinds, but to ensure its long-term sustainability,” the president said.

Last week, the president attended the launch of BMW’s new X3 plug-in hybrid at the company’s Rosslyn plant in Tshwane. South Africa is the exclusive global production site for this model.

The president said the shift from internal combustion engines (ICE) towards hybrid and electric vehicles (EVs) in a number of markets means that green mobility is becoming increasingly important for automotive manufacturers.

He described BMW’s latest investment, which follows its pledge at the 2023 South Africa Investment Conference as “a welcome signal to investors that South Africa remains a favourable place to do business.”

Government, he said, is actively working to ensure an enabling regulatory and policy environment that supports growth in the automotive sector.

He pointed to the Automotive Production and Development Programme as a key mechanism to position South Africa as a key global manufacturing base for vehicles of the future.”

Youth development

Beyond manufacturing, the president emphasised the sector’s contribution to youth development and skills training.

“BMW, for example, has a training academy that focuses on competencies like EV assembly and robotics. The company is also a founding partner of the Youth Employment Service (YES), which was established between the government and the private sector to create work experience opportunities for young people.

“BMW’s participation in this programme has supported more than 3,500 young people with training and work placements across all nine provinces.”

President Ramaphosa also encouraged other companies to follow BMW’s example and broaden their involvement in the YES programme.

“We have invited more companies to participate in the Youth Employment Service programme as broadly as BMW has done.

“We are working to ensure that more production takes place locally, creating more employment. To do this, we must upskill our workforce and facilitate the creation of new companies across the value chain,” he said.

He also acknowledged the role of the Tshwane Automotive Special Economic Zone’s Centre of Excellence, which includes an artisan training academy, incubation hub, and STEM (Science, Technology, Engineering and Mathematics) education initiatives for high school learners.

“There are also a number of industry-driven training initiatives focusing on technical and artisanal skills, and deepening collaboration between Government departments, vocational colleges and companies to grow a new skills pipeline,” the president said.