The automotive industry has developed into a major player within the country’s economic landscape.
South Africa’s manufacturing sector accounts for 13,2% of the country’s GDP, making it a vital driver of economic growth. It is also a major contributor to exports and foreign currency earnings.
As the largest manufacturing sector in the country’s economy, vehicle and component production accounted for 30,1% of South Africa’s manufacturing output in 2017, while the broader automotive industry’s contribution to the GDP stood at 6,9% (4,4% manufacturing and 2,5% retail).
The automotive industry therefore represents an increasingly important strategic and catalytic role in the overall South African economy by impacting directly on many important aspects, such as contribution to GDP, employment, skills development, economic linkages, technology and innovation, and making significant contributions to the fiscus through taxes, and substantial foreign direct investment. Total automotive revenue in the ambit of the automotive business sphere in South Africa amounted to over $40 billion in 2017.
South Africa is regarded as a global tier 2 player, and forms part of the group of countries producing below one million vehicles per annum. South African vehicle production increased to 601 178 vehicles in 2017, up 0,2% from the 600 008 units produced in 2016. However, the country’s global vehicle production ranking remained at 22nd in 2017, with a market share of 0,62%. In terms of global LCV production, South Africa was ranked 15th with a market share of 1,25%, while with regard to global passenger car production, the country was ranked 26th with a market share of 0,45%. On the African continent, Morocco is starting to catch up to South Africa, and is conveniently positioned close to the EU market.
In contrast to many other industries, South African automotive firms have proven to be resilient against adverse economic conditions due to the high level of integration with domestic component suppliers, a stable policy framework and export diversification. Despite a number of macro-economic headwinds faced in the domestic economy, exports of automotive products constitute the major economic success in the country.
The South African automotive industry is well placed geographically to benefit from the growth in Africa and well positioned to gain momentum as the world economy recovers.
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