In an ever-competitive local automotive landscape, Toyota, with its Durban manufacturing hub in mind, warned against the dangers of accepting subsidised Chinese imports openly.
Toyota South Africa Motors (TSAM) once again used its annual State of the Motor Industry (SOMI) event as a platform to provide insights into the continually evolving automotive landscape. The event featured key presentations from TSAM’s President and CEO, Andrew Kirby, and Senior Vice President for Sales and Marketing, Leon Theron, alongside special guest Rory Reid from the UK.
In his keynote address titled “The Year That Was”, Kirby delved into the challenges facing the South African motor industry, emphasising the need to push annual vehicle sales beyond the 600 000 unit threshold. As it stands, the South African market has not yet increased to sales figures from pre-COVID-19 and has been hovering under the 550 000 mark for some time. Achieving this, he argued, would create the scale required to attract further foreign direct investment.
While the South African government’s recent policy to incentivise battery electric vehicle (BEV) production is a step forward, Kirby cautioned that more substantial support is needed to safeguard the country’s automotive production sector. The ongoing trend of de-industrialisation and a decline in local content – now below 40% for domestically manufactured vehicles – only adds to these concerns.
Kirby remained cautiously optimistic in his sales forecast of 535 000 units for 2025 – a 3.7% increase on 2024 figures – though he humorously suggested that he might need to “put a more positive spin on the numbers.” However, he reiterated that any meaningful growth would depend on continued interest rate cuts and fuel price stabilisation.
He added that trade pressures between China and key global markets were resulting in China shifting its exports to countries in the Global South, such as Asia, Africa and Latin America.
Chinese companies enjoying significant subsidisation, coupled with South Africa’s free trade of rebates and semi-knocked down option, encourages de-industrialisation as it is attractive under Chapter 98 of the Automotive Production Development Programme.
The distorted trade conditions for Chinese automotive and parts manufacturers over local producers necessitates the protection of the local automotive manufacturing sector from becoming an import replacement market.
To illustrate the growth of Chinese-branded vehicle imports, Kirby explains how locally produced vehicle sales have dropped from 46% of the overall market in 2018 to 43% in 2023. In turn, Indian and Chinese-sourced vehicle sales have increased from 18% in 2018 to 37% in 2023. This while traditional source countries such as Germany, Japan and Korea have significantly reduced their sales.
Apart from sales, Kirby said that South Africa’s automotive localisation has dropped from 42% in 2021 to 38% in 2023, with tier 2 and lower suppliers being the most impacted. Localisation refers to the portion of locally sourced components that are found within locally made vehicles.
Kirby told the audience that since the introduction of the latest motor industry production and development programme, the Automotive Master Plan, by former trade, industry and competition minister Ebrahim Patel in 2021, the share of local components in South African made cars has fallen, not risen.