The good news for the South African motor industry, says Toyota South Africa Motors president and CEO Andrew Kirby, is that after its barnstorming 15.6% improvement in 2025, the local new vehicle market is likely to grow by a further 5.5% this year, to 636,000. The bad news is that Chinese and Indian imports will soak up most of the increase.
In 2006, South Africa-made vehicles accounted for 56% of sales. Twenty years on, their share is 33%. That’s a drop of 23 percentage points but 41% in real terms. The current 33% local share will be 30% before long, says Kirby. “We expect the current share decline to be a lot more severe in 2026,” he says.
Automotive policy should aim to return this to between 40% and 50%, he says. For that to happen, government policymakers will have to stop sitting on their hands and actually do something. The 2021-2035 automotive production & development programme (APDP), which governs the industry, is clearly not providing existing vehicle and components manufacturers with the support that was intended. Vehicle production and employment are supposed to double during the APDP’s duration, and localisation is to grow 50%. In fact, all are declining as the market dominance of imports forces factories to reduce production or even close.
The department of trade, industry & competition, which oversees the programme, said recently it was considering antidumping measures against Chinese and Indian vehicles. Kirby, while agreeing with industry peers that heightened protection is required to rescue the industry from potential collapse, says the APDP needs only “tweaks and minor changes”, rather than the major surgery that some people have suggested — including mountainous import tariffs.
Industry analyst and policy adviser Justin Barnes agrees. Overprotection would place an unfair price burden on consumers who are buying imports because of their relative affordability.
It would also be interesting to see how well the idea of antidumping protection would go down with China, which has just granted duty-free access to its market to South African agricultural and other products.
Even so, Kirby — who spoke at Toyota’s annual State of the Motor Industry conference in Joburg on Thursday — says that “after talking about APDP changes [with the government] for 1½ to two years”, the need for decisive decision-making is urgent.
We expect the current share decline to be a lot more severe in 2026
— Andrew Kirby
For the industry to reach its APDP goals, it needs to grow both domestic and export demand for South Africa-made vehicles. But there is an unsustainable imbalance between the two markets. Of 609,000 vehicles produced in 2025, only 198,000 were sold here. Just over two-thirds — 68% — were exported. The 411,000 export total was a record.
Of those, however, 81% went to the UK and EU — markets that, in the next decade, will ban virtually all sales of new vehicles reliant on petrol and diesel internal combustion engines (ICE), in favour of new-energy vehicles, mainly electric. The UK will ban all ICE vehicles from 2030, then hybrid vehicles, using a mix of electric and ICE power, from 2035. The EU recently softened its stance, but ICE will be limited to 10% of total sales from 2035.
Since most locally made vehicles are ICE, the industry says the shift to local production of electric vehicles (EVs) must be a priority, to be incorporated fully within the APDP. The government has said a lot about it but done little. One change that Kirby and others want from its current stance is to reduce the incentive emphasis on all-electric, plug-in battery-electric vehicles (BEVs) and open the door to hybrids using a mixture of electric and ICE technology. This includes both plain hybrids, in which the ICE component continuously recharges the electric motor without the need for external charging, and plug-in hybrids, which, as the name suggests, require recharging from the energy grid.
The EU, UK and some other markets view hybrids as merely a stepping stone to the ultimate goal, BEVs. Kirby, however, says they should be considered a goal in themselves. For nearly all South African customers, BEVs are not an affordable medium-term option. Hybrids are a much better bet. Even then, consumers need the kind of purchasing incentives that have encouraged market demand in other countries.
Barnes says: “The inconvenient truth is that ICE is consistently cheaper than BEV. The price gap is closing and will eventually go away, but none of us knows when. At the moment, BEVs in South Africa are bought by people who are not price-sensitive.”
ICE, he says, will continue to dominate the South African market for the next five to 10 years. Kirby hopes not. Globally, he says, 44% of all Toyota car sales are of hybrids. The South African market should be aiming for that kind of share by 2030.
There will still be demand for ICE vehicles, particularly in emerging markets across Africa. The continent used to account for 19% of South African vehicle exports. Now it’s 8%. If countries, mainly in Sub-Saharan and West Africa, would limit market access to imports of cheap, used vehicles, it would not only grow the market for new ones but also accelerate well-advanced plans to create a pan-African motor industry that could help industrialise dozens of countries. The African Continental Free Trade Area agreement will also help.
Barnes says it’s in everyone’s interests for the South African motor industry to flourish. It provides hundreds of thousands of jobs, contributes 5.2% to GDP and offers mobility to millions of people. But the biggest beneficiary, he says, is the government. The average aggregate tax on a new vehicle is R120,000. Multiply that by hundreds of thousands and the result is vital to the exchequer.
Barnes says: “The government enjoys huge fiscal benefits from the motor industry. It earns billions of rand in benefits from the seven major vehicle manufacturers.”
One of those, Nissan, recently said it will stop producing vehicles at its assembly plant in Rosslyn, Tshwane, which — subject to government approval — will be bought by Chery. The Chinese manufacturer is expected to keep most of the current workforce but has made no announcement yet of its plans for the plant. There are hopes, however, that its purchase could lead to more Chinese automotive manufacturing investment.
Kirby says: “On the surface, it’s very good that Chery has purchased the Nissan factory so there is a sustainable solution for the facility. Nissan had midscale volume with very good local value addition [from local content]. That’s how we should be judging the purchase. If Chery comes in with less local content, that does not help.”
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