As automotive manufacturer Volkswagen Group Africa celebrates its seventy-fifth anniversary, the company has outlined the challenges and opportunities it sees in the local automotive sector during this year’s Volkswagen Indaba, at the Kariega manufacturing plant, in the Eastern Cape.

As challenges continue to plague the local automotive manufacturing sector, Volkswagen South Africa passenger cars brand head Niels Wichmann described 2025 as a “tough year” for the company.

He noted that, despite challenges, the company gained traction in the last quarter of the year. Additionally, he said, the Vivo was still the most sold car in the country last year.

“We have a committed network behind us, and we want to make sure that we gain traction again for 2026,” he said.

During the Indaba, Volkswagen Group Africa MD Martina Biene described the South African automotive sector as being at a “crossroads,” noting that domestic automotive production was underperforming.

During a question-and-answer session at the event, Biene said this year would be a pivotal year for Volkswagen in South Africa, revealing that she had written a letter to President Cyril Ramaphosa at the end of last year outlining the importance for the South African business to get an investment decision on producing a new vehicle from the global group this year.

She said an investment decision hinges on strong economics in the business case, adding that Volkswagen headquarters needed to see progress in South African policymaking.

“Otherwise, yes, you might have a business case, but there's better business cases elsewhere, [and] we don't know whether that is a sustainable way to . . . spend money,” said Biene.

Gordon Institute of Business Science economics, finance and strategy professor Dr Adrian Saville added that South Africa needs to “seriously wake up,” highlighting the need for policy that is fit for purpose.

“We don't have the luxury of two or three years of debating and deliberating. The requirement is urgent,” said Saville.

Biene said she was not willing to give up yet but called for the quicker implementation of key automotive polices, such as the South African Automotive Masterplan and the Automotive Production and Development Programme.

Biene also referenced the difficulty of competing with other markets where the cost of doing business was lower than in South Africa.

She also advocated for the implementation of the African Continental Free Trade Area (AfCFTA) and for greater levels of intra-African trade of vehicles and automotive components.

“I'm a strong believer in that African narrative, in the [AfCFTA], as well as a growing automotive market. Our plan foresees that we gain back market share in 2026,” she said.

Biene highlighted four pillars that required urgent action and policy revision in order to maintain the automotive sector as a “driving force”.

These issues pertain to a lack of scale; import substitution; an over-reliance by South African on one region; and policy uncertainty regarding the new-energy vehicle transition.

Biene described South Africa’s over-reliance on exports to Europe as both a strength and potentially a weakness.

As Europe transitions to battery electric vehicles (BEVs), she explained that South Africa had not catered for this shift in terms of policy for BEV manufacturing.

Biene highlighted that Volkswagen Group Africa produced 156 837 vehicles in 2025, of which 76% was for export markets.

Biene described 2025 as “another great year” for Volkswagen Group Africa in terms of exports to Europe, noting that the company aimed to strategically try to maintain exports to Europe over the next ten years.

“There's a strong need for a sense of urgency for action, and I think we are almost all aligned on what actions need to be taken.”

NEW VEHICLES COMING SOON

Despite challenges in the sector, Volkswagen Group Africa is set to introduce new cars into the market this year.

This includes a new T-Roc, the all-new plug-in hybrid Caravelle V7, the Vivo Xpress and the Polo GTI Edition 20.

Additionally, the company is also introducing new content and safety features into its Polo models.

The new generation Caravelle model is a 180 kW 4Motion vehicle.

“This vehicle is not just an update or a facelift, it's a completely new generation versus the previous T6.1 Caravelle that we had in the market,” said Volkswagen South Africa regional sales manager Stuart Daniels during the launch.

He explained that a fundamental aspect of this new model is the MQB modular platform, which is the same architecture which underpins, for example, the Golf, as well as the Tiguan.

This provides improved comfort in the vehicle, as well as dynamic handling and a more “car-like” feel, rather than a bus.

The vehicle is also equipped with various safety features, such as IQ Drive Travel Assist which includes adaptive cruise control and lane assist, which provides semi-automation up to highway speeds in the vehicle.

Safety features in the car include city emergency braking, dynamic roadside display, as well as a 360° camera, which was not previously available on the car.

“With the new T7 Caravelle, the vehicle is more modern, the vehicle is more comfortable, and the vehicle is more versatile.”

Also speaking at the event, Audi South Africa head Markus Schuster described 2025 as a “great year for Audi in a very challenging market environment”. The company sold 5 350 cars, with a premium market share of 17%.

Top-selling models included the A1, Q3 and Q5.

Schuster said this year would be a “very crucial” year for Audi as the company launches new models in South Africa.

New models include the all-new Audi Q3, the all-new Audi Q5, the RS 5 and the RS e-Tron GT Performance.

Schuster also introduced the Audi Freeway Plan Extension. He explained that every new Audi includes a five-year 100 000 km freeway plan which is now extendable for up to 15 years, or 300 000 km.

Additionally, Schuster also announced Audi’s entry into the Formula 1 racing competition this year.

Audi South Africa became a wholly-owned subsidiary of the Volkswagen Group Africa in 2020.

Meanwhile, Volkswagen also unveiled new motorcycle models from motorcycle company Ducati South Africa.

During the Indaba, the Ducati Desmo 450 MX, the Desmo 450 EDX and the Desmo 450 MX factory models were introduced, kicking off the Ducati Desmo range in South Africa.

The introduction of these models highlights Ducati's entry into the dirt-only motorcycle market.

The Ducati 450 MX made its debut at the King of the Whip freestyle motorcross competition last year.

Ducati South Africa was added to Volkswagen Group Africa’s stable last year and the company is expected to open the Ducati Johannesburg branch in March.

This year will mark Ducati South Africa’s first year of full commercial operations in South Africa.