Auto Sector Jobs at Risk Without Support for New Energy Vehicles

What happened

South Africa’s automotive industry is at a crucial crossroads. Currently, nearly 70% of vehicles sold in the country are imported, which has significant implications for local manufacturers, jobs, and economic development. Renai Moothilal, CEO of Naacam (National Association of Automotive Component and Allied Manufacturers), has highlighted the urgent need for government policy to support a multi-pathway future that encourages local production and incorporates new energy vehicles (NEVs).

The absence of a clear and comprehensive New Energy Vehicle policy creates uncertainty for the sector. Without government intervention and incentives, local players may struggle to compete with imported vehicles, particularly electric and hybrid models, which are gaining traction worldwide.

Why it matters

The automotive sector is one of South Africa’s key industrial pillars, directly and indirectly employing hundreds of thousands of people across manufacturing, components, and dealerships. However, with the growing shift towards electric and hybrid vehicles globally, the industry faces a transformation that requires adaptation.

If South Africa does not develop policies that support local manufacturing and assembly of NEVs, the country risks missing out on new market opportunities. This could lead to increased vehicle imports and the loss of critical jobs in manufacturing and supply chains.

Moreover, localisation — making more components and vehicles within South Africa — strengthens the economy by creating jobs, enabling skills development, and reducing reliance on imports, which can be vulnerable to global supply chain disruptions and currency fluctuations.

What this means for South Africans

For ordinary South Africans, the auto sector is more than just about vehicles on the road. It represents jobs, skills training, and economic stability. If the sector shrinks due to missed opportunities in NEVs or fails to localise, many workers could face job losses, particularly in manufacturing towns like Rosslyn, East London, and others where automotive factories provide livelihoods.

Additionally, a lack of policy clarity could delay consumers’ access to affordable electric vehicles, slowing down South Africa’s transition to greener transport options. Given the country’s commitments to reducing carbon emissions and increasing energy efficiency, a robust NEV strategy is crucial.

Impact on consumers, jobs and small businesses

Consumers may end up paying higher prices for vehicles if local production cannot compete with imports, especially as electric vehicles become more mainstream. A stronger local industry could help lower costs through economies of scale and reduce reliance on volatile international markets.

Job losses in the auto sector don’t just affect factory workers. Small businesses in the supply chain, component manufacturing, logistics, retail, and service centers also feel the ripple effects. Supporting a local NEV supply chain means preserving these jobs and potentially creating new ones in emerging technologies, such as battery production and electric motor manufacturing.

For small businesses, clear government policies and incentives could unlock opportunities in niche areas like EV charging infrastructure, parts recycling, and maintenance services tailored to new energy vehicles.

Risks and limitations

While the need for a comprehensive NEV policy is critical, there are challenges. South Africa’s energy supply constraints and high electricity costs could deter investment in electric vehicle manufacturing and adoption. Without improvements in the national grid and affordable, clean energy sources, the cost benefits of NEVs may not be fully realized.

Additionally, building a local NEV industry requires significant investment in skills development, infrastructure, and technology. The government and private sector will need to collaborate closely to create an enabling environment.

Finally, global competition is intense, with countries like China and Germany already well ahead in NEV production. South Africa must identify competitive niches and leverage existing strengths in components manufacturing to carve out its place in the global supply chain.

In summary, the South African auto industry faces both challenges and opportunities. A proactive and clear policy approach towards new energy vehicles and localisation is essential to safeguard jobs, grow the economy, and ensure consumers have access to affordable, sustainable vehicles in the future.

Source: Naacam CEO Renai Moothilal commentary on the need for NEV policy support in South Africa

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