As the automotive components industry enters a period of structural change, financial institution Nedbank Commercial Banking says the sector’s long-term survival depends on aligning finance with industrial competitiveness rather than short-term liquidity.

Nedbank highlights that South Africa’s automotive value chain “stands at a decisive turning point” as global trade realignments, electric mobility and localisation imperatives are reshaping how the country’s component suppliers operate, which, in turn, affects the way in which financiers respond.

This environment demands a more engaged form of banking that combines financial discipline with strategic foresight, states Nedbank Commercial Banking manufacturing national manager Amith Singh, adding that the bank’s approach has been to move from reactive credit provision to proactive, partnership-led engagement with clients and industry bodies.

“We see our role as enabling sustainable competitiveness and not just financing it. That means supporting clients before disruption hits, whether through advisory insight, risk diversification or targeted investment in new technologies,” Singh notes.

Localisation as Leverage

Singh argues that localisation is no longer just an aspirational policy goal but a structural necessity. As global manufacturers rebalance supply chains closer to production hubs, the capacity to produce quality components locally will determine which suppliers remain viable.

Nedbank has positioned itself as a key financial partner in this transition. Its sector specialists work with manufacturers to identify funding gaps in machinery upgrades, capacity expansion and process automation, which are areas where capital intensity often outpaces available working capital.

The bank has also placed emphasis on data-driven risk assessment, using industry analytics to align credit decisions with production performance and market trends. This approach, Singh notes, allows financiers to differentiate between cyclical distress and strategic opportunity.

Crucially, Nedbank’s localisation strategy ties financial performance to developmental outcomes. By linking funding criteria to job retention, skills development and value-chain inclusion, the bank aims to reinforce industrial depth rather than short-term recovery.

“Transformation is no longer abstract; it has to be reflected in localisation, in local jobs, local capacity and tangible economic participation,” Singh says.

Financing the Transition

With the shift towards new energy vehicles (NEVs) and reduced-emission mobility, the automotive landscape is changing faster than many business models can adapt.

Nedbank’s investment approach is designed to bridge this transition responsibly by aligning green financing with commercial sustainability, Singh says.

The bank is working alongside engineering and infrastructure partners to support charging networks and hybrid logistics solutions that can underpin broader NEV adoption. Rather than supporting isolated projects, Nedbank’s strategy is to build programmatic platforms that aggregate projects under standardised contracts and shared risk structures, improving efficiency and scalability.

Beyond electrification, Singh identifies production efficiency as the next major competitiveness factor, as many suppliers still operate with outdated equipment or fragmented digital systems, which limits productivity.

Nedbank’s response has been to structure financing that prioritises operational upgrades while managing liquidity constraints. The goal is to ensure that investments in automation or energy efficiency translate into measurable performance gains, not additional debt exposure.

At policy level, Singh notes that the Automotive Production and Development Programme and the Automotive Master Plan remain central to industry stability. He adds that evolving market conditions, including supply chain pressures and technology shifts, may require ongoing alignment between implementation timelines, localisation ambitions and industry capacity.

He points out that supply disruptions, geopolitical shifts and the accelerated pace of technology adoption have altered the automotive sector’s risk valuation.

Singh emphasises that future competitiveness will depend increasingly on continental integration under the African Continental Free Trade Area, with South Africa potentially playing a pivotal role as a production hub and knowledge base for Africa’s emerging automotive ecosystem.

However, he cautions that harmonised standards, streamlined logistics and financial frameworks that accommodate cross-border collaboration are needed to realise this potential.

Nedbank’s strategy focuses on pairing financing solutions with policy and market insight, helping clients navigate regulatory complexity while identifying regional growth opportunities. The bank’s approach reflects a long-term perspective of “investing now to unlock sustainable growth later”.

While the global automotive industry faces uncertainty, Singh maintains that the intersection of finance and industrial policy can serve as a stabilising force, provided it remains intentional, informed and grounded in partnership. He concludes that, for Nedbank, the guiding principle is clear: finance must drive depth, not dependency.