The automotive industry plays a key role in South Africa’s economy, with the broader automotive sector’s contribution to the gross domestic product (GDP) amounting to 4.9% (comprising 2.9% manufacturing and 2.0% retail). 

South Africa is ranked 20th globally in car manufacturing and accounts for more than two-thirds of Africa’s total automotive output. The country is home to seven original equipment manufacturers (OEMs), including Toyota, Mercedes-Benz, Ford, Volkswagen, BMW, Nissan and Isuzu. Stellantis will become the 8th OEM, following the recent announcement of a R3 billion investment. South Africa is also home to approximately 500 automotive component suppliers, including 180 first-tier suppliers. 

The Automotive Production & Development Programme (APDP) and the South African Automotive Master plan (SAAM) 2035 provide a clear vision and direction for the country’s automotive industry. With its advanced infrastructure, diverse economy, sophisticated capital markets and developed manufacturing capacity, South Africa is the ideal location for any company aspiring to reach the continental market more effectively, both from a cost and logistics point of view.

Despite these success stories, the South African automotive industry continues to face challenges. The industry must look for new ways to redefine its future against the backdrop of pricing pressures and aggressive competition. Some of the challenges faced in this sector include carbon emission considerations, lack of infrastructure for electric vehicles, declining new vehicle sales and high interest rates. Other significant factors are:

• Changes in consumer preference
• Environmental concerns
• Technology disruption
• Economic downturn 
• Supply chain disruption.

At BDO, we assist our automotive industry clients in embracing the opportunities and facing any challenges. Using the combined industry knowledge and experience of our partners and staff, we provide the necessary tailored audit, advisory and tax services to help you achieve your goals. 

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