INDUSTRY NEWS
ASIAN INVESTMENT
DRIVES RAPID CHANGE IN AFRICAN AUTOMOTIVE
Africa’ s automotive market is changing dramatically. Previously dominated by European and American brands, it is now being rapidly reshaped by a growing presence of Asian automotive manufacturers from China, India, Japan, and South Korea. These players are transforming the continent’ s automotive supply chain, vehicle sales, and local manufacturing capabilities
Dylan Petzer, National Vice-Chairman of the Tyre, Equipment, Parts Association( TEPA), which is part of the Retail Motor Industry Organisation( RMI), characterizes the influx of Asian automotive brands as a rapid and significant shift. He state s that this is not a gradual change but a“ fast-moving wave,” leading to a major realignment in African mobility and its economy, fundamentally altering the familiar automotive landscape.
China has become the leading source of automotive aftermarket parts in South Africa. Since surpassing other nations in 2018, China’ s dominance peaked in 2021, accounting for 64 % of all imported aftermarket parts. This substantial figure, according to Petzer, signifies market dominance rather than mere influence.
India has made significant progress, particularly in the small and entry-level vehicle sectors where affordability is key. According to Petzer, Indian manufacturers have become major providers of cost-effective vehicles, meeting the significant demand for budget-friendly transportation.
Long-established Japanese and South Korean brands in the Asian market are facing increasing competition and must revise their strategies. According to Petzer, even these major players are needing to adapt.
Asian manufacturers are increasingly investing in local assembly and parts production, a shift not limited to imports. For instance, Chinese firm BAIC has invested R11 billion in a new plant in Gqeberha. In Durban, Toyota, in collaboration with Thailand’ s Ogihara, is investing over R1.1 billion in its operations. Additionally, Chinese supplier Yanfeng Plastic Omnium has invested R1 billion in Tshwane to produce components for BMW.
“ These investments suggest a dual strategy,” says Petzer.“ On one hand, it shows belief in the potential of Africa’ s automotive market; on the other, it allows these companies to meet local content requirements and reduce import duties. It is both strategic and tactical.”
Foreign investment offers advantages like job creation and infrastructure growth. However, it also strengthens the market dominance of Asian manufacturers. According to Petzer, the difficulty lies in striking a balance that attracts foreign capital while preventing the marginalization of domestic businesses.
Established OEMs like Ford, BMW, Volkswagen, and Toyota are adapting to maintain competitiveness. Their strategies include pursuing efficiencies via partnerships and increasing their reliance on Asian part suppliers. According to Petzer, these companies face a dilemma: prioritize cost savings or continue supporting local suppliers to align with government industrial objectives.
Local parts manufacturers, meanwhile, are under increasing pressure. They are being squeezed by the influx of cheaper imports and the widening technology gap, especially as the global shift towards electric vehicles( EVs) accelerates.“ How does a small, independent parts manufacturer in a town like Springs compete with high-volume, high-tech factories in Asia?” asks Petzer.“ This is a tough reality, and there is no simple answer.”
Petzer highlights potential opportunities for local manufacturers through specialization, high-quality manufacturing, and entering the EV component market early, which can establish a competitive advantage. He emphasizes the critical role of government support, citing the Automotive Investment Scheme( AIS) and NAACAM programs as essential for the survival of the local industry. These initiatives, according to Petzer, are vital for safeguarding businesses, local jobs, and the development of necessary skills.
Projections suggest that within the next decade, Asian brands could account for 40 – 45 % of vehicle sales in South Africa. Their blend of affordability and improving quality makes them highly competitive.
To maintain their market position, both local and international OEMs should strengthen relationships with Asian suppliers and pursue joint ventures and technological collaborations. Petzer cautions that the increasingly globalized supply chain necessitates adaptation to avoid obsolescence. For local manufacturers, innovation, partnerships, and a defined strategy for engaging with the expanding EV market are crucial for future success. Petzer states that the EV transition could significantly shape the future of local manufacturing.
Policy decisions are crucial for shaping future results. The African Continental Free Trade Area( AfCFTA) offers an opportunity to increase trade within Africa, allowing local manufacturers to grow. Simultaneously, South Africa’ s membership in BRICS enhances its economic connections with China and India, thereby impacting automotive trade patterns.
“ The real balancing act lies with policymakers. They must find ways to attract foreign investment while nurturing local industry. If done correctly, we can achieve inclusive, sustainable growth. If not, we risk eroding our industrial base.“ Africa’ s automotive future is being reshaped at speed, and stakeholders at every level must prepare accordingly. The shift is not temporary, it is structural, and it is here to stay,” concluded Petzer. Dylan Petzer
aBr WORDS IN ACTION 18 JUNE 2025