A possible shutdown at a big German-owned vehicle plant in the Eastern Cape has everyone in South Africa’s auto industry on edge. If this plant goes, the shockwaves will not stop at the factory gates—they will hit suppliers, service providers and entire communities.
This is not just a factory issue and Maureen Phiri, who heads Oxyon People Solutions, says a shutdown means thousands of people lose their jobs immediately. The fallout stretches further—suppliers, logistics, maintenance crews, security teams, all get hit. When you look at the whole supply chain, she warns, more than 100 000 jobs across South Africa are at risk.
Millions have gone into plant, machinery, and infrastructure. If it all sits idle, export volumes will plummet, and South African-made cars will stop shipping to overseas buyers. Phiri’s bigger worry is about what this says to global investors about South Africa’s manufacturing climate.
Starting or running a small business and in need of a bakkie – click here
It gets worse. The Eastern Cape already struggles with high unemployment, and mass layoffs will squeeze families and local businesses even harder. Auto manufacturers do more than build cars—they train artisans, technicians, and engineers.
If plants close, those training programs vanish, setting back efforts to grow technical skills and create jobs. Less money flowing into households means local shops and service providers suffer, which could trigger even more job losses and push people to leave for better prospects elsewhere.
But there is a glimmer of hope in the global shift toward electric vehicles (EVs). It is a challenge, yes, but also a shot at something new. Chinese EV brands are expanding fast and already have a foothold in South Africa.
They could be convinced, like Chery, to invest in local production, making use of the existing plants, skilled workers, and supplier networks. Building EVs here fits the country’s push for a greener industry and cuts down reliance on imports.
South Africa’s location helps too—it has preferential access to Southern African markets and trade deals that open doors to Europe and beyond. With a solid supply chain and the right government policies, the country could become a hub for EV manufacturing.
Looking for a safe car for a student then click here
Still, production costs here are higher than in places like China. Recent tax breaks for EV and hydrogen vehicle investments are a start, especially for new equipment, but industry leaders say it is not enough.
They want rebates for companies that hire locally and meet local content requirements, funding to modernize plants, and help for suppliers transitioning to EV parts. Clear, long-term EV policies are necessary. If the country does not lower costs and offer policy certainty, investors will look elsewhere.
Hiten Parmar, who runs The Electric Mission, points to tough international regulations putting even more pressure on South Africa to transform its industry for zero-emission cars. Thousands of jobs across the auto value chain are on the line.
The industry wants higher import duties to protect local jobs, clear and stable EV policies, stricter local content rules (worked out in partnership with suppliers), and easier regulations for new players. Consistency and transparency in policy are key to keeping investors interested.
Recent layoffs show how urgent it is to have a real plan for workers. The call is for government, industry, training groups and schools to work together on reskilling—getting people ready for EV assembly, battery work and advanced manufacturing. Giving EV companies incentives to hire those displaced workers helps keep skills in the sector and limits job losses.
Can I afford it – find out with this handy Finance Calculator
Meanwhile, Europe is moving fast on zero-emission vehicles and ramping up battery production. That puts extra pressure on South Africa, which sent around 169 000 vehicles to the EU in 2022—about 4% of their imports. Other African countries, like Morocco, are catching up quickly, reporting robust growth in auto output.
Parmar says with Europe eyeing 2035 for its green transition, South Africa cannot afford to wait. The country needs to act now—on both the supply and demand side—to keep its auto industry coordinated with its biggest export markets.
South Africa’s automotive sector is still a significant part of the economy. Industry stakeholders say that without a coherent policy framework and targeted incentives, the sector faces contraction and job losses. With coordinated action on policy, investment and skills development, they add, the country could attract EV manufacturing and preserve jobs across the value chain.
Colin Windell for Colin-on-Cars in association with
proudly CHANGECARS
