The South African automotive industry continues to experience swift and wide-ranging changes, creating both challenges and opportunities for businesses across the value chain. This evolving landscape was unpacked by Kgalaletso Tlhoaele, Enterprise Development Executive at Absa Business Banking, who reminded industry participants of the critical economic weight carried by the sector and the need for strong support for smaller enterprises.
Kgalaletso explained that the industry’s growth over recent years has been shaped by intense competition and an increasingly demanding consumer base. He noted that the sector consists of multiple layers, ranging from manufacturing and importing to trade, repairs and aftermarket services. These activities have all adapted to economic pressures and shifting buyer expectations.
One of the most notable changes, according to the presentation, is the decline in income generated by large enterprises with annual turnovers above R1 billion. At the same time, medium and small enterprises are increasing their contribution.
The shift indicates either downsizing by larger firms or the opening of space for smaller companies to enter and expand. The tyre segment remains the largest, followed by vehicle parts, lubricants, batteries, brake parts and paint.
Kgalaletso highlighted that consumer preferences and economic influences remain the strongest drivers of change. Buyers are increasingly focused on safety, styling, fuel efficiency, comfort and environmental considerations. Economic conditions such as inflation, taxation, interest rates, disposable income and broader political and social influences also shape market trends.
He also outlined the extensive range of industry participants, from manufacturers and dealer groups to brokers, independent traders, equipment suppliers and service and repair operators. Despite this varied landscape, the industry remains a major employer, accounting for 3.4 percent of formal employment, or around 250 000 jobs. Profit margins are thin in many areas, although used cars, parts and accessories consistently show stronger returns.
Kgalaletso also pointed to Absa’s efforts to empower SMEs through strategic enterprise development. In partnership with the Automotive Industry Development Centre, Absa has signed a Memorandum of Agreement to advance local manufacturing and service focused businesses. “Our goal is to help SMEs grow into profitable and sustainable businesses by providing access to finance, markets and business development support that aligns with their unique needs.”
This partnership provides training, mentorship and market access to help smaller firms become supplier ready. Absa’s support includes specialised financial products, development finance, incubators, access to technology and participation in industry platforms. Alternative Lending Solutions further assists profitable businesses that lack collateral, with a particular focus on black owned enterprises and a 50 percent rebate for Automotive Aftermarket clients.
“We are building an enabling environment for SMEs to succeed through market access, mentorship, and sustainable funding solutions that help unlock South Africa’s economic potential,” Kgalaletso concluded.
