Part of Investing: guides on bringing capital into South Africa, investing your own money, and the rules that apply.
South Africa builds vehicles for export and buys most of its parts from abroad, and that mismatch is the whole investment case for South African automotive components. This guide is for foreign and local investors weighing a component plant, a tooling business or a stake in a supplier: how big the industry is, what government support exists and who can claim it, which export markets are open, and what can go wrong. It separates official rules, industry and press commentary, and things nobody publishes a number for.
This guide was last reviewed on 30 September 2026 and is general information, not legal, immigration, tax or investment advice.
The short version: vehicle exports hit a record in 2025, but component exports fell, the main incentive policy is under review with no published outcome yet, the new electric vehicle tax deduction is not available to component makers, and US tariffs, Durban port delays and power costs all need to be in the model before capital goes in.
How big the industry is
The naamsa Automotive Trade Manual 2026 release (naamsa is the Automotive Business Council, which publishes the industry’s official data) gives the 2025 numbers used below.
| Measure (2025) | Figure |
|---|---|
| Vehicle production | 618 077 units, up 2.9% from 600 473; 0.64% of world output, ranked 21st |
| Vehicle exports | 414 271 units (a record), worth R229.8 billion |
| Component exports | R61.2 billion, down 3.5% from R63.4 billion |
| Vehicle plus component exports | R291.0 billion, 15.6% of all South African exports |
| Share of manufacturing value added | 23.8% (vehicles and components) |
| Imported original equipment parts bought by the seven OEMs | R151.0 billion |
| Imported replacement parts | R107.5 billion |
Read the last two rows as the opportunity and the warning. The seven vehicle makers import R151.0 billion of parts for assembly, which is the pool a new local supplier competes for. But naamsa says the decline in component exports came mainly from falling catalytic converter sales, and catalytic converters were still 26.0% of all component exports, followed by engine parts, tyres, and transmission shafts and cranks. The export base for parts is narrow and tied to combustion technology.
On jobs, the President said in September 2026 that the industry supports more than 115 000 direct manufacturing jobs and more than half a million across the value chain. For the component segment, NAACAM (the component manufacturers’ association) reports 82 560 jobs, R170 billion in supplier sales and R46 billion of Tier 1 local content in 2023, the newest year on its page. Its members sold 48.3% of output to vehicle assemblers and 32.3% to exports.
The Automotive Industry Export Council (AIEC) describes itself as the official private sector export promotion body for the automotive industry, set up in 1999, and is the place to ask about product and market data.
Policy: the Masterplan, the APDP and the review
The dtic published the South African Automotive Masterplan to 2035 in December 2018. Its development objectives include growing vehicle production to 1% of global output, raising local content in South African assembled vehicles to up to 60%, and doubling total employment in the value chain.
Progress on the local content target is poor. Business Day reported Minister Parks Tau’s written parliamentary reply: local content in assembled vehicles was 38.7% in 2015 and 38.1% in the third quarter of 2025, and he called performance “negligible and lacklustre”. That is press coverage of a parliamentary reply, not a dtic release. For a component maker, the gap between 38% and 60% is the argument for localisation policy, and also a reminder that the target has not been met for a decade.
The day-to-day framework is the Automotive Production and Development Programme. SARS describes APDP Phase 2 (regulations published 5 February 2021) as using production rebate certificates that rebate customs duties, a volume assembly localisation allowance based on local value addition, and a B-BBEE compliance requirement. Participation is approved by the International Trade Administration Commission (ITAC).
The status today is a review. Minister Tau said in his May 2026 budget vote speech that the dtic is reviewing the APDP “with a view to stimulate new investments in South Africa and supporting the growth of our component manufacturers”. Business Day reported that amendments were expected to start in the fourth quarter of this financial year, subject to National Treasury approval. We found no published outcome as of 30 September 2026. Financial Mail reported that Toyota South Africa’s chief executive said the delay has persuaded some foreign vehicle and component companies to reduce or postpone investment. That is one executive’s view, but it tells you a rule change is pending and could move your economics.
Incentives and what a component maker can claim
Our guide to dtic investment incentives covers the wider menu. The automotive ones are below, taken from the dtic incentive guide dated January 2026 and the dtic’s February 2024 EV notice. The dtic’s own AIS web page returned a server error when we checked, so we relied on those two documents.
| Support | What it gives | Who it suits | Catch |
|---|---|---|---|
| Automotive Investment Scheme (AIS) | Non-taxable cash grant of 20% of qualifying productive assets for OEMs and 25% for component and tooling makers | Component makers with a supply contract, award or letter of intent for the light vehicle supply chain | B-BBEE level 1 to 4 certificate; keep base-year employment; must reach at least 25% of entity turnover or R10 million a year from the project by the end of its first full year of production |
| EV support under the AIS (notice of February 2024) | 20% reimbursable cash grant for OEMs plus a 150% depreciation allowance via SARS; 35% reimbursable cash grant for component makers, tooling makers and battery assemblers | Makers of parts for battery electric, fuel cell and other alternative energy vehicles | The notice excludes combustion, hybrid and plug-in hybrid vehicles; it said detailed guidelines would follow and we could not confirm they are out |
| Section 12V (income tax) | 150% deduction for qualifying assets used mainly to produce battery electric or hydrogen-powered vehicles, brought into use from 1 March 2026 to before 1 March 2036 | Registered light vehicle makers and heavy vehicle makers | Component and tooling makers are excluded; 50% recoupment if the asset is sold within five years |
| APDP production rebates | Customs duty rebates and localisation allowances for participating vehicle makers | Indirect: OEMs use them to decide what to buy locally | Under review |
Section 12V does not help component makers
This is the point most likely to surprise an investor. The SARS draft interpretation note on section 12V says the section came into operation on 1 March 2026 and introduces a 150% allowance, and that automotive component manufacturers and tooling manufacturers “are excluded from claiming a deduction under section 12V”. The note is a draft, so check the enacted text with a tax adviser. The component route to electric vehicle support is the AIS grant, not the tax deduction. As an illustration of the OEM side, a R10 million qualifying asset would give a R15 million deduction, worth R4.05 million of tax at 27% if there is enough taxable income.
The policy position on electric vehicles
Cabinet approved the electric vehicles White Paper, and the dtic released it on 4 December 2023, according to the government news agency. Its goal is a dual platform of electric and combustion vehicles in production and consumption by 2035. Local electric vehicle demand is still small: naamsa counted 16 716 new energy vehicle sales in 2025, a 2.8% share. The plants building plug-in hybrids for export today are BMW Rosslyn (the X3, after a R4.2 billion investment announced in 2023) and Ford Silverton (the Ranger). We could not verify the import duty on electric vehicles at the SARS tariff book; commentary puts it above the duty on combustion cars, so check the current schedule.
Trade access
Trade status changes quickly, so each line is dated.
| Market | Position (as of 30 September 2026) | Watch |
|---|---|---|
| EU and UK | 62.8% of 2025 automotive export value (R182.8 billion), and 80.3% of light vehicle exports went to the region, per naamsa. The SADC-EU Economic Partnership Agreement removes EU customs duties on 98.7% of South African imports, under specific quantity quotas | Concentration: a European demand or rules change hits every exporter |
| United States | The CBP tariff overview of January 2026 lists a 25% Section 232 tariff on passenger vehicles, light trucks and auto parts of all countries. The USTR notice puts a 12.5% Section 301 tariff on South African products from 24 July 2026 but exempts articles subject to Section 232 | Parts pay the 232 rate, not both. Invest SA still describes US access as duty-free under AGOA, which our sources do not support for vehicles and parts |
| AGOA | Reauthorised to 31 December 2026, backdated to 30 September 2025 | Expires at year end unless renewed |
| SADC and the rest of Africa | Africa took R49.5 billion (17.0%) of 2025 automotive exports, 85.1% of it to SADC, which is a free trade area. naamsa says automotive rules of origin under the AfCFTA have been adopted since February 2026 | We did not verify the content thresholds at an official source |
The US matters less than the headlines suggest for vehicles: Invest SA, quoting naamsa, puts North America at 1.6% of 2025 vehicle exports. For a component maker the exposure is through your customer’s model, so ask which vehicles your part goes into and where they are sold. Our export guide covers the paperwork.
Who buys from you: the OEM base and the tier structure
Invest SA lists seven light vehicle makers: BMW (Rosslyn, Gauteng), Ford (Silverton, Gauteng, plus an engine plant at Struandale), Isuzu (Gqeberha), Mercedes-Benz (East London), Nissan (Rosslyn), Toyota (Prospecton, KwaZulu-Natal) and Volkswagen (Kariega, Eastern Cape). It notes that Nissan announced the sale of Rosslyn to Chery South Africa in January 2026. Press reports say Chery took control in July, but we did not find the company release, so treat the customer map around Rosslyn as changing.
Recent commitments show where volume is going. President Ramaphosa welcomed Toyota’s R10.4 billion investment in the ninth-generation Hilux in July 2026, and Volkswagen’s R4 billion investment for the Tengo, a third model at Kariega alongside the Polo and Polo Vivo, announced at the end of August 2026. New models are when sourcing decisions are made, so the window for a new supplier is at program launch, not mid-cycle.
NAACAM says it represents about 150 manufacturing brands across more than 210 sites, that over 80% supply the local OEMs and the aftermarket, and that the rest are Tier 2 and Tier 3 firms and direct exporters. The Automotive Industry Development Centre Eastern Cape says it works with small businesses and Tier 1 to 3 suppliers to help them meet global quality standards. Invest SA also lists an Automotive Industry Development Centre in Tshwane for Gauteng.
What a new supplier has to win
- A customer. The AIS grant itself asks for a contract, award or letter of intent.
- Quality certification. IATF 16949:2016 is the automotive quality standard, run on top of ISO 9001. The IATF FAQs say certification is optional for a maker of aftermarket replacement parts only, unless a customer requires it, in which case it is mandatory. We found no public list of which South African OEMs require it from which tiers; ask each purchasing team.
- Cost and logistics fit. OEMs will compare your landed price with imports.
Labour, ports and power
Labour
The vehicle makers settled a three-year wage deal in November 2025. NUMSA’s statement says it runs from 1 July 2025 to 30 June 2028, with 7% in the first year and 5.5% or CPI, whichever is greater, in the second and third, plus a R12 500 once-off gratuity. It covers the seven OEMs; we did not review the arrangements for component makers. The same statement is advocacy: NUMSA claims 63% of vehicles sold locally are imported, while naamsa puts light vehicle imports at 69.1% of sales in 2025. Both say the domestic market is increasingly supplied from abroad.
Ports
Transnet and ICTSI’s 25-year partnership for Durban Container Terminal Pier 2 started on 1 January 2026, with targets of 2.8 million containers a year and crane moves rising from 18 to 28 an hour. Targets are not results. Daily Maverick reported on 29 September 2026 that a mid-August switch to a new operating system caused delays of more than a month, which freight forwarders called one of the most serious periods of constraint at Pier 2 in recent years. That is press reporting. We found no data on whether vehicle or parts shipments specifically were affected.
Power
Eskom says NERSA approved an average increase of 8.76% for direct customers from 1 April 2026 and 9.01% for municipal bulk purchasers from 1 July 2026. Foundries, stamping and coating lines are energy heavy, so model the tariff and on-site generation.
How an investor starts
- Pick a part and a customer first. Talk to the OEM’s purchasing team and find out when its next sourcing round for that model happens.
- Check quality certification: budget for IATF 16949 if a customer needs it, and the AIDC centres for support.
- Register the company (company registration guide) and plan the movement of funds (exchange control guide).
- Apply for the AIS grant before you spend; check whether your project qualifies as an EV component at the higher rate.
- Model US tariff exposure through your customer’s export mix, then port and power costs at the exact site.
- If you will run the business in South Africa, read the business visa guide, and see the wider Investing hub.
What we could not confirm
The outcome of the APDP and Masterplan review; whether the dtic has published the detailed EV guidelines; the import duty on electric vehicles; the AfCFTA content thresholds for vehicles; the dtic AIS page itself (server error on the day); the current Chery and Nissan position from a company source; and component-sector wage arrangements. No official figure is published for AIS processing times.
Frequently asked questions
Can a component maker claim the section 12V electric vehicle deduction?
According to the SARS draft interpretation note, no. It says component and tooling manufacturers are excluded, and the deduction goes to registered light vehicle makers and heavy vehicle makers. Component makers can look at the AIS grant instead.
How much is the Automotive Investment Scheme grant for components?
The dtic guide dated January 2026 lists a non-taxable cash grant of 25% of qualifying productive assets for component and tooling makers, with conditions on B-BBEE, employment and supply-chain turnover. The February 2024 notice lists 35% for electric vehicle components, as a reimbursable cash grant.
Are South African car parts hit by the US 12.5% tariff?
The USTR notice exempts articles already subject to Section 232, and the CBP overview lists auto parts at 25% under Section 232, so parts pay the 25% rather than the 12.5%. Check your tariff line, because this changes often.
Do I need IATF 16949 to supply a vehicle maker?
IATF says certification is mandatory when the automotive customer requires it and optional for aftermarket-only makers. We found no public list of South African OEM requirements, so ask the purchasing team.
Is the APDP changing?
It is under review. The minister said the dtic is reviewing it, and press reports point to changes from the fourth quarter of 2026, but we found no published outcome at 30 September 2026.
Which regions have the OEM plants?
Gauteng (BMW, Ford, Nissan’s Rosslyn plant), the Eastern Cape (Volkswagen, Isuzu, Mercedes-Benz, Ford engines) and KwaZulu-Natal (Toyota), according to Invest SA.
