South Africa's Automotive Sector Navigates Tariff Turbulence and Market Pressures

South Africa's motor industry is facing a challenging year as global trade dynamics, domestic affordability, and supply chain issues combine to test resilience. The Automotive Business Council (naamsa) has released its second-quarter 2025 review, offering insight into the performance and prospects of the sector.

While US-imposed tariffs have dominated headlines, other trends are shaping the market. Domestic vehicle production dropped by 3.9% compared to Q2 2024, and exports fell 3.6%, largely due to an 82.7% collapse in shipments to North America. The Eastern Cape, a hub for vehicle assembly, has seen steep declines in output and exports following the tariffs introduced under Section 232 trade measures.

The United States was South Africa's second-largest trading partner in 2024, with automotive trade valued at R50.75 billion. With tariffs now applied, OEMs face reduced competitiveness, raising concerns over profitability and long-term investment. Despite these setbacks, the domestic market showed mixed signals. New vehicle sales rose by 17.4% compared to Q2 2024 but declined by 6.4% against Q1 2025. NEV sales also fell 10.8%, dropping from 4,122 units in Q2 2024 to 3,678 units this year. naamsa warns that without accelerated NEV-friendly policies, South Africa risks losing its position in the global value chain.

Employment in the sector remains relatively stable, increasing by 217 jobs to 32,426 as of June 2025. However, supply chain delays and an uncertain export environment continue to affect capacity utilisation. Capital investment stood at R7.3 billion in 2024, mainly for new-generation models, but future spending may depend on policy clarity and market recovery.