South Africa’s motor manufacturing industry is on a path towards structural decline that mirrors the country’s broader deindustrialisation trend, Toyota South Africa Motors CEO Andrew Kirby has warned.
Speaking at Toyota South Africa’s annual State of the Motor Industry briefing on Thursday, Kirby painted a picture of an industry that appears healthy on the surface – vehicle sales grew 15.7% last year and exports hit a record 411 000 units – but is increasingly fragile underneath.
The central problem is one of balance. Only 33% of all vehicles sold in South Africa last year were locally manufactured, down from 56% in 2006. At the same time, 81% of all vehicles exported from the country went to a single destination bloc: the UK and EU.
Both trends, Kirby argued, are unsustainable – and they are about to collide.
The UK’s zero emissions vehicle mandate requires manufacturers to sell a rising proportion of zero-emission vehicles each year. The EU enforces average emission ratios with financial penalties for non-compliance. Both regimes are tightening, and while recent adjustments – the UK extended hybrid sales to 2035, while the EU introduced a 10% flexibility allowance – have bought some time, the direction is clear.
South Africa does not produce competitive new energy vehicles at scale. Only 4% of new energy vehicle models sold in the country are locally manufactured, and the components required for hybrid or battery electric production have not been localised.
“We are most likely, over the next five years, going to see significant decline in exports to Europe and the UK,” Kirby warned. Without locally produced new energy vehicles, South Africa cannot meet the regulatory requirements of its dominant export market.
‘Prematurely deindustrialising’
The alternative – retreating to conventional internal combustion engine production for a shrinking pool of markets – is not viable either, he said. “If we say we can’t afford to transition, we are effectively saying we will also give up on exports, and we’ll become a rear guard manufacturer of old, conventional technology.”
Kirby placed the sector’s challenges within the context of South Africa’s declining manufacturing base. The country’s manufacturing value addition per capita has fallen from US$720 in 2000 to $640 today – a regression that has seen South Africa slip behind peers that pursued more intentional industrial policies.
Read: South Africa must defend its car industry – before it’s too late
“We are prematurely deindustrialising as a country,” he said. “The question is, are we now starting to see the early signs of that potentially happening with the auto sector as well?”
The sector is one of South Africa’s most significant industrial contributors, generating foreign exchange, skills and employment across a deep supply chain built over more than a century. But rising input costs – energy, labour, water security and logistics – are eroding the cost advantages that once underpinned the country’s competitiveness, particularly against Asian manufacturers.
Toyota itself has had to build a dam at its Prospecton plant to ensure water security, Kirby disclosed, while rail logistics remain a persistent constraint despite improvements in port operations.
Even the headline sales growth figure is less encouraging than it appears. Kirby showed that much of the 15.7% increase was driven by entry-level models within each segment, rather than broad-based demand recovery. In value terms, the growth was far more modest – consistent with GDP growth of just 1.2% rather than the 3.5% that true volume growth of that magnitude would imply.
“We need to see that 15.7% in perspective,” he said. “It reflects just how constrained consumer spending is.”
Key priorities
Kirby outlined three priorities:
- First, raise the share of locally manufactured vehicles sold domestically back to between 40% and 50%, through incremental, fiscally neutral policy adjustments rather than blunt protectionist instruments.
- Second, secure government support for investment in low-scale new energy vehicle production and customer incentives to close the price premium gap.
- Third, diversify export markets – particularly into Africa, where South Africa’s share has fallen from 19% to 8% – and leverage the African Continental Free Trade Area.
With the right interventions, South Africa could increase both domestic sales and exports by 20%, generating R21-billion in additional manufacturing value and 14 500 direct jobs, with a multiplier effect of between four and 12 times across the value chain, Kirby said.
Read: BMW South Africa warns EV policy paralysis is stalling investment
But the investment cycle in automotive is three to four years. Decisions concluded in 2026 would only affect production from 2029 or 2030. “The speed and the importance of responding now is absolutely crucial,” Kirby said. – © 2026 NewsCentral Media
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