News emerging over the past weekend weekend (6-8 February) has drawn attention to a letter sent by Martina Biene, chair and managing director of Volkswagen Group Africa (VWGA), to President Cyril Ramaphosa highlighting mounting risks facing the country’s automotive industry.
Biene’s correspondence, written shortly before Christmas but now widely reported, sought to inject urgency into government decision-making on policies that could determine whether Volkswagen secures future investment for its South African operations. She explained that 2026 is a crucial year in which the company’s German headquarters will decide on the next major project, making policy clarity essential.
At the centre of the appeal is the need for a stronger business case to justify continued capital investment. Biene indicated that Volkswagen’s global leadership is assessing both the economics of proposed projects and the broader policy environment in South Africa before committing funds.
The letter forms part of a broader warning from Volkswagen that the domestic automotive sector is under severe strain. Analysts note that local vehicle manufacturing has declined relative to imports, with only about one in three cars sold in South Africa now produced locally, down sharply from historical levels. The company has also stressed that improved incentives and regulatory support are necessary for planned investments such as new vehicle production programmes.
Industry-wide concerns extend beyond investment conditions. Volkswagen and other manufacturers have highlighted delayed policy development for new-energy vehicles, uncertainty around tax structures, and rising competition from imported vehicles as factors threatening future competitiveness.
The stakes are significant. Volkswagen South Africa employs roughly 4,000 people directly, and the wider automotive sector supports hundreds of thousands of jobs across supply chains. Observers warn that continued decline could accelerate deindustrialisation if investment decisions shift to other markets offering more predictable operating environments.
Volkswagen has previously pointed to infrastructure challenges, particularly electricity reliability, as increasing production costs and weakening South Africa’s competitiveness compared with other global plants.
Government has signalled its intention to support the transition to new-energy vehicles through incentives and policy reforms, but industry leaders argue that implementation has been too slow to secure upcoming investment cycles.
Biene’s letter therefore underscores a pivotal moment for South Africa’s automotive manufacturing base: without swift policy certainty and improved operating conditions, one of the country’s flagship industrial sectors faces an increasingly uncertain future.
