This year is “make or break” for Volkswagen in South Africa, says Martina Biene, MD of Volkswagen Group Africa (VWGA). The government must act immediately to close automotive policy loopholes that encourage imports, or the company, which is celebrating 75 years of vehicle manufacture in South Africa, may have to reconsider its future.
However, Isuzu Motors South Africa CEO Billy Tom cautions against overuse of proposed import tariffs to protect the local industry from what some companies have described as “dumping” of cheap vehicles in South Africa. While agreeing that “time is running out” for some form of protection, he says US President Donald Trump’s stop-start weaponisation of tariffs shows the danger of using them as a “toy”. Tom says: “We can’t use tariffs to block everything. Consumers need affordable vehicles.”
Nevertheless, Biene says the industry can no longer afford for the government to keep sitting on its hands. Nissan recently announced its manufacturing disinvestment from South Africa, and several components companies have already shut down, with the loss of thousands of jobs. Though Chinese company Chery has said it plans to buy Nissan’s facilities, the intended scale of the new operation is not clear.
It’s no longer enough to simply talk about protecting the industry, says Biene. Last week, the department of trade, industry & competition said it was actively considering protective tariff measures against imports — a step up from its previous stance that it “would” consider them.
Statements of intent are no longer enough, Biene says. In 2025, VWGA’s car assembly plant in Kariega in the Eastern Cape lost 20,000 Polo exports to Europe because of that continent’s market shift to electric vehicles (EVs). With cheap imports into South Africa — primarily from China and India — now dominating the local new car market, industry-wide production volumes are shrinking. Kariega experienced 30 days of short-time working towards the end of 2025.
Kariega built just over 156,000 Polo and Vivo cars in 2025. While significant by South African standards, it is the second-lowest volume plant in the VW world, accounting for less than 1% of group production. Europe’s EV transition will further limit exports in the coming years. It is hoped that African sales growth, particularly once the continent’s nascent free-trade rules open new markets, will largely compensate in the longer term, but Kariega development also relies on South African market growth.
Biene says VWGA, which has lost significant market share to imports, will “fight back” in 2026 but admits it will not be easy against competitors with significantly lower manufacturing costs. Production volumes of a single imported car may outnumber the combined production of the entire South African motor industry.
Kariega is due to add a small SUV to its product portfolio in 2027, but that alone won’t do the trick for VWGA. Nor will the planned introduction of a mild-hybrid-electric Polo, offering a combination of EV and traditional internal combustion engine technology. Local manufacturers in general need policy protection, says Biene.
They, along with components suppliers and unions, spent most of 2025 pleading with the government to adjust the 2021-2035 automotive production & development programme (APDP), which is supposed to double the size of the motor industry but, instead, is overseeing its contraction. Rather than the heavy manufacturing investment that was intended, vehicle and components companies are cutting production and jobs. Imports account for two-thirds of cars and bakkies sold in South Africa.
South Africa is an industrial graveyard
— Adrian Saville
Among other measures, the industry is asking for increased tariff protection against imports, closure of loopholes offering tariff benefits for the assembly of imported vehicle kits, policy clarity on the future of EV manufacturing, and the right to “monetise” unused APDP manufacturing and localisation incentives for use within the business. Biene says they could be used for reducing ad valorem luxury tax commitments on South Africa-made vehicles or for investment in components suppliers.
Trade, industry & competition minister Parks Tau, like his predecessor, Ebrahim Patel, has expressed sympathy for the industry’s challenges and the unintended consequences of the APDP, but has done little to solve them.
Biene says: “I don’t know why the government won’t act. We have lots of discussions with Tau and we all agree, but nothing happens.” Her frustration persuaded her to write to President Cyril Ramaphosa late last year to alert him to the inaction. Unsurprisingly, perhaps, she has not had a response.
Adrian Saville, professor of economics, finance and strategy at the Gordon Institute of Business Science, says the APDP “is not fit for purpose”. The need for action is urgent. “We don’t have time for lengthy debate.”
Policymakers, he says, must understand that foreign investors have up to 200 countries in which to invest. They will go where the returns are best. South Africa, where manufacturing generally is disincentivised and in decline, is not an attractive proposition. “South Africa is an industrial graveyard,” he says.
Saville and Biene were in Kariega on Wednesday.
Tom urges moderation in any demand for protection: “We don’t want to be seen as a crybaby.”
He says there is a strong argument for policy intervention. Rather than the current seven full-scale vehicle manufacturers (including Nissan), he says South Africa needs at least 15. While Chery, fellow Chinese brand BAIC and Europe-based Stellantis have plans, current policy is not welcoming.
“We have to create an environment in which people who have invested feel safe,” Tom says. “We don’t have that at the moment. The barriers that exist to encourage investment simply aren’t sufficient. We need to be firmer.”
Isuzu itself is spending R500m on the introduction later this year of an updated D-Max bakkie.
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