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

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Rising competitors from EVs in key markets cited as one of many causes for sharp decline.

Six years in the past, I wrote an article on how South Africa might miss out on the huge alternatives from the EV transition if the country did not act fast enough. That’s as a result of the auto business is a key pillar of South Africa’s economic system however makes ICE autos in a world shifting fairly swiftly to electrical. In keeping with stories from South Africa’s Automotive Enterprise Council, namesake:

The automotive business contributes 5.3% to GDP (3.2% manufacturing and a pair of.1% retail);
In 2023, the export of autos and automotive parts reached a document quantity of R270.8 billion, equating to 14.7% of South Africa’s whole exports;
The business accounts for 21.9% of the nation’s manufacturing output;
Autos and parts are exported to 148 worldwide markets;
The manufacturing phase of the business presently employs within the order of 116,000 individuals throughout its numerous tiers of exercise (from part manufacturing to automobile meeting);
Mixed with the business’s sturdy multiplier impact, the business is accountable for roughly 498,000 jobs throughout the South African economic system’s formal sector.

The issue is over 99% of the autos manufactured in South Africa for export are full ICE autos and a lot of the nations the place the autos produced in South African are being exported to are seeing growing adoption of electrical autos. “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 provides that for the primary time since COVID-19 dramatically affected 2020, automobile exports declined in 2024, to 308,830 items, down by a considerable 22.8% in comparison with the document efficiency of 2023 when the business exported 399,594 items. Varied components impacted the plummeting in automobile exports, together with a slowdown in demand within the EU, the home automotive business’s key export area, resulting from low financial development, stricter emission guidelines, and competitors from cheaper electrical automobile imports from China within the area, in addition to the timing impact of recent mannequin introductions within the home market by a significant exporting OEMs.

South Africa’s Auto Export Gross sales Efficiency From 2020 To 2024

South Africa auto — Sources: naamsa, Lightstone Auto

One of many principal causes cited for the sharp decline in exports was growing competitors in these key export markets from “cheaper electric vehicle imports from China” in 2024. However who can say they didn’t see this coming? We wrote about this 6 years in the past! South Africa wanted to maneuver sooner to extend the portion of electrical autos made in South Africa.

Have a look at the UK for instance. In keeping with the Society of Motor Producers and Merchants (SMMT), new automobile registrations reached 1.953 million in 2024, with the market up 2.6% yr on yr. EVs took a document annual quantity and market share at 19.6%. Purchases had been pushed by company-related purchases because of the finish of incentives for personal patrons. Non-public shopper demand contracted to ranges final seen within the pandemic, with only one in 10 non-public patrons going electrical in 2024. Nevertheless, EVs nonetheless made up 20% of all gross sales in 2024 within the nation. This share will probably maintain going up in keeping with mandated targets for the UK. Which means, if South Africa desires to maintain exporting vital volumes, it wants to begin including extra EVs to its export combine. South Africa wants to take action ASAP.

South Africa has began to make some strikes. Final week, the nation introduced a 150% tax deduction on investment in electric and hydrogen-powered vehicle production. Nevertheless, this kicks in from 2026. Why not instantly? South Africa wants to maneuver sooner on this.

So, supply-side incentives are coming. What about demand facet incentives for the native South African market? Effectively, there may be an EV inexperienced paper and all — let’s hope a number of the key suggestions are launched sooner somewhat than later.

On common, the native part portion in autos made in South Africa is presently at 38%. The federal government has a purpose of accelerating the native part share to 60% by the yr 2035! 2035 is an fascinating yr as many countries, lots of whom would characteristic prominently on the record of South Africa’s 155 export locations, are aiming to affect. With fewer shifting elements in EVs, electrical autos appear to current a sooner manner of reaching this South African goal. This will even assist efforts to extend the beneficiation of native sources in addition to useful resource wealthy neighbouring nations comparable to Mozambique and Zimbabwe in addition to regional nations comparable to Zambia and the Democratic Republic of Congo. The entire nations have a lot of the key components for producing electrical automobile parts.

Maybe it’s time for South Africa to additionally have a look at positioning itself as a regional hub for the manufacturing of electrical autos for Southern Africa and past on the African continent. EVs such because the BYD Seagull and Wuling Bingo come to thoughts. A number of nations import over 50,000 used autos per yr. For 20 nations, that’s at the least 1 million autos per yr. If we are saying 30% of them are on this small automobile phase, that’s at the least 300,000 autos per yr, which might make a good addressable market to begin with.

These 300,000 might be shipped as utterly knocked down kits after which assembled regionally in these respective nations on the African continent, progressively growing the contribution of native parts. The potential advantages that might be derived from this might be large for nations on the continent. These embody:

Job creation on the newly arrange or expanded meeting vegetation
Growth and growth of companies and related part producers alongside the downstream industries
Beneficiation of native sources
Expertise improvement and coaching of employees in new industries
Partnerships with native universities, technical faculties, and analysis establishments in numerous areas of analysis and improvement
Elevated adoption of EVs leading to discount of fossil gasoline imports, saving a lot wanted overseas forex.
Essential mass of autos would catalyse the expansion of versatile automobile financing platforms and different new progressive enterprise fashions backed by good warranties. At present the used autos don’t have any guarantee.
Decrease operational prices for ride-share driver companions in addition to business fleet operators comparable to automobile rental companies boosting fleet gross sales.
Progress of synergistic companies comparable to distributed photo voltaic for charging EVs.

South Africa simply wants to maneuver an entire lot sooner and step up its EV sport!