South Africa’s ICE Vehicle Exports Decline by 23% In 2024 – CleanTechnica

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Growing competition from EVs in key markets cited as one of the reasons for sharp decline.

Six years ago, I wrote an article on how South Africa could miss out on the massive opportunities from the EV transition if the country did not act fast enough. That’s because the auto industry is a key pillar of South Africa’s economy but makes ICE vehicles in a world moving quite swiftly to electric. According to reports from South Africa’s Automotive Business Council, naamsa:

• The automotive industry contributes 5.3% to GDP [3.2% manufacturing and 2.1% retail];
• In 2023, the export of vehicles and automotive components reached a record amount of R270.8 billion, equating to 14.7% of South Africa’s total exports;
• The industry accounts for 21.9% of the country’s manufacturing output;
• Vehicles and components are exported to 148 international markets;
• The manufacturing segment of the industry presently employs in the order of 116,000 people across its various tiers of activity [from component manufacturing to vehicle assembly];
• Combined with the industry’s strong multiplier effect, the industry is responsible for approximately 498,000 jobs across the South African economy’s formal sector.

The problem is over 99% of the vehicles manufactured in South Africa for export are full ICE vehicles and most of the countries where the vehicles produced in South African are being exported to are seeing increasing adoption of electric vehicles. “A significant two out of every three vehicles manufactured in South Africa are exported, enabling the domestic OEMs to reach a much broader consumer base beyond the South African market,” naamsa says. “Exports remain key to generate sufficient economies of scale, and to achieve improved international competitiveness. As an export-oriented industry, the domestic automotive sector has embraced the trade opportunities via the specific trade arrangements that South Africa has concluded over the past three decades, opening certain markets in Europe, the US, and Africa, among others.”

Naamsa adds that for the first time since COVID-19 dramatically affected 2020, vehicle exports declined in 2024, to 308,830 units, down by a substantial 22.8% compared to the record performance of 2023 when the industry exported 399,594 units. Various factors impacted the plummeting in vehicle exports, including a slowdown in demand in the EU, the domestic automotive industry’s key export region, due to low economic growth, stricter emission rules, and competition from cheaper electric vehicle imports from China in the region, as well as the timing effect of new model introductions in the domestic market by a major exporting OEMs.

South Africa’s Auto Export Sales Performance From 2020 To 2024

One of the main reasons cited for the sharp decline in exports was increasing competition in those key export markets from “cheaper electric vehicle imports from China” in 2024. But who can say they didn’t see this coming? We wrote about this 6 years ago! South Africa needed to move faster to increase the portion of electric vehicles made in South Africa.

Look at the United Kingdom for example. According to the Society of Motor Manufacturers and Traders (SMMT), new car registrations reached 1.953 million in 2024, with the market up 2.6% year on year. EVs took a record annual volume and market share at 19.6%. Purchases were driven by company-related purchases due to the end of incentives for private buyers. Private consumer demand contracted to levels last seen in the pandemic, with just one in 10 private buyers going electric in 2024. However, EVs still made up 20% of all sales in 2024 in the country. This share will likely keep going up in line with mandated targets for the UK. That means, if South Africa wants to keep exporting significant volumes, it needs to start adding more EVs to its export mix. South Africa needs to do so ASAP.

South Africa has started to make some moves. Last week, the country announced a 150% tax deduction on investment in electric and hydrogen-powered vehicle production. However, this kicks in from 2026. Why not immediately? South Africa needs to move faster on this.

So, supply-side incentives are coming. What about demand side incentives for the local South African market? Well, there is an EV green paper and all — let’s hope some of the key recommendations are introduced sooner rather than later.

On average, the local component portion in vehicles made in South Africa is currently at 38%. The government has a goal of increasing the local component share to 60% by the year 2035! 2035 is an interesting year as many nations, many of whom would feature prominently on the list of South Africa’s 155 export destinations, are aiming to electrify. With fewer moving parts in EVs, electric vehicles seem to present a faster way of achieving this South African target. This will also help efforts to increase the beneficiation of local resources as well as resource rich neighbouring countries such as Mozambique and Zimbabwe as well as regional countries such as Zambia and the Democratic Republic of Congo. All of the countries have most of the key elements for producing electric vehicle components.

Perhaps it’s time for South Africa to also look at positioning itself as a regional hub for the manufacturing of electric vehicles for Southern Africa and beyond on the African continent. EVs such as the BYD Seagull and Wuling Bingo come to mind. Several countries import over 50,000 used vehicles per year. For 20 countries, that is at least 1 million vehicles per year. If we say 30% of them are in this small vehicle segment, that’s at least 300,000 vehicles per year, which would make a decent addressable market to start with.

These 300,000 could be shipped as completely knocked down kits and then assembled locally in those respective countries on the African continent, progressively increasing the contribution of local components. The potential benefits that could be derived from this would be huge for countries on the continent. These include:

• Job creation at the newly set up or expanded assembly plants
• Development and expansion of businesses and associated component manufacturers along the downstream industries
• Beneficiation of local resources
• Skills development and training of workers in new industries
• Partnerships with local universities, technical colleges, and research institutions in various areas of research and development
• Increased adoption of EVs resulting in reduction of fossil fuel imports, saving much needed foreign currency.
• Critical mass of vehicles would catalyse the growth of flexible vehicle financing platforms and other new innovative business models backed by good warranties. Currently the used vehicles don’t have any warranty.
• Lower operational costs for ride-share driver partners as well as commercial fleet operators such as car rental businesses boosting fleet sales.
• Growth of synergistic businesses such as distributed solar for charging EVs.

South Africa just needs to move a whole lot faster and step up its EV game!