South Africa is currently in discussions with Chinese automakers to encourage investment in local vehicle production. A senior government official has revealed that one manufacturer has shown significant interest in establishing local assembly operations.
As Africa’s leading car manufacturing hub faces a decline in domestic output and a rise in imported vehicles—primarily from China—the need for local production has become increasingly urgent.
Increasing Competition
The automotive market is becoming more competitive, with established brands like Toyota and Volkswagen vying for market share against emerging electric vehicle producers such as BYD, Chery, Great Wall Motor, and Beijing Automotive Group (BAIC).
Deputy Minister of Trade, Industry, and Competition Zuko Godlimpi informed Parliament that negotiations are ongoing with several Chinese manufacturers, with a focus on producing vehicles locally rather than relying on imports. An area of particular interest for these companies is the development of hybrid and electric vehicles, which align with global market demands.
Potential Developments
One Chinese automaker has already engaged in discussions with the trade and industry department, expressing interest in setting up operations in either East London or Port Elizabeth. This move is part of a broader strategy by Chinese manufacturers to expand into Africa as they seek new profit opportunities amid intense price competition in their domestic market.
Currently, brands such as BYD and Chery are among approximately 15 Chinese car manufacturers operating in South Africa, with additional companies like Geely, Leapmotor, and Changan expected to enter the market soon.
Tariff Reviews
To further protect the local automotive sector from low-cost imports, South Africa is reviewing its tariff structure. Godlimpi stated that efforts are underway to increase import duties to ensure that cheap imports do not undermine the competitiveness of South African-manufactured vehicles. However, he noted that implementing such changes will take time.