Addressing delegates at the National Association of Automotive Components and Allied Manufacturers’ (NAACAM’s) 2025 Show, in Gqeberha, on August 14, Deputy President Paul Mashatile acknowledged that South Africa’s automotive and manufacturing industries are navigating especially difficult times, with global geopolitics having negatively impacted on the sectors just as the economy started showing signs of recovery.

“This extraordinary time necessitates collaboration between government and the private sector to address a growing dependence on imports. We must ensure that we address this seriously, particularly infrastructure inadequacies, the transition to electric vehicles (EVs) and the issue of the 30% US import tariffs (in the US),” he said.

Mashatile confirmed that President Cyril Ramaphosa would soon be sending a delegation to the US to try and negotiate the import tariff having been placed on South African goods and to devise practical solutions for trade with the US going forward.

He added that NAACAM convened its fourth show at an opportune moment to delineate the path forward for the automotive component manufacturing industry. He also lauded the continued investment on NAACAM’s part to improve the supplier development landscape and localisation in South Africa.

“The automotive industry holds significant potential for shared prosperity through more targeted industrial development. This sector is testament to successful industrial policy having been implemented in the past and remains one of the country’s most strategically important and internationally-linked industries.”

The Deputy President pointed out that the component industry exported R62.5-billion of products in 2024 and that the loss of these gains must be prohibited amid external and internal pressures.

Over the past two years, NAACAM has already recorded 12 company closures that impacted more than 4 000 individuals. This while the latest unemployment data shows an increase to the headline unemployment figure to 33.2% in the second quarter.

“We need to do more to combat unemployment, including by developing skills to match labour demands, promoting entrepreneurship and enabling small-, medium- and micro-sized enterprises. Government is committed to working with various sectors to improve policy frameworks, advance infrastructure development and craft more incentives,” Mashatile stated.

Some key existing initiatives that Mashatile encouraged more participation in include the Automotive Investment Scheme, which offers non-taxable cash grants to encourage investments in new vehicle models and components.

Mashatile also called for more investment in research and development, particularly to use the power of technology to improve efficiency and sustainability, ensuring that products and services stay competitive in the global market.

“By fostering a culture of collaboration among stakeholders, we can unlock new opportunities for growth and prosperity,” the Deputy President emphasised.

The automotive sector, not just in South Africa but in Africa, had emerged as a critical area of investment, providing substantial prospects for growth and development, Mashatile said. He added we must not overlook the significance of the African Continental Free Trade Area for economic integration and industrialisation.

By reducing trade barriers, fostering regional value chains and harmonising regulations, the African automotive sector can increase production, lower costs for consumers and ensure a more competitive market.

“The implementation of this agreement has the potential to decrease Africa’s dependence on imports of completed vehicles. However, this does not suggest we do not need other nations as trading partners.

“We believe in diversifying our investments and engaging with several partners, including the US,” Mashatile explained.

He pointed out how a continued 30% import tariff in the US market would have repercussions throughout the value chain of many industries, including volume cutbacks, pressure on production planning, lower employment or retrenchments and of course, lower investment.

South Africa would effectively be unable to compete with regions that enjoyed duty-free access to the US market, including Canada and Mexico. “We will continue to engage with the US to identify practical solutions,” Mashatile affirmed.

Moreover, Mashatile said beyond the current external shocks to trade, South Africa must focus on the opportunity of increasing localisation with existing and new original-equipment manufacturers. He believes South Africa is well positioned to manufacturing fuel cells, e-axles and thermal systems, among other new energy vehicle systems.

He expressed confidence in the country’s ability to continue a rich legacy of automotive innovation and a skilled workforce capable of competing at a global scale.

“Through new inclusive business models and partnerships, we can ensure that the benefits of industrial growth are shared equitably across all South Africans. As we navigate the challenges and opportunities that lie ahead, let us remember that our strength lies in our unity and collective vision for a brighter future,” Mashatile concluded.