Suzuki isn’t itching to establish a vehicle manufacturing plant in South Africa, but it’s not completely off the cards.
Suzuki has achieved tremendous success in the domestic market since it arrived in 2008, beating numerous of its own sales records over the past few years and seeing its Swift hatchback briefly becoming the best-selling car in the country.
Concurrently, several automakers have shown interest in setting up their own factories on South African soil in recent times, among them three unnamed Chinese companies, as well as Indian conglomerate Mahindra.
Stellantis, one of the world’s top manufacturers with 14 brands under its umbrella, is actively building a manufacturing hub in the Eastern Cape where it will be assembling the Peugeot Landtrek from 2026 onwards, whereas bakkie maker Foton will join the club in the near future, too.
South Africa is also introducing incentives for the production of new-energy vehicles and their related components which is set to come into effect in 2026.
These incentives will allow qualifying producers to claim a 150% tax deduction on investment in electric- and hydrogen-powered vehicle production.
In light of this, it appears that South Africa is positioning itself as a prime location for car manufacturers, and with Suzuki being one of the market darlings, it seems possible that it, too, would be thinking about erecting a factory in our borders, perhaps for something like the sought-after Swift.
TopAuto thus decided to get in touch with the local arm of the Japanese automaker to inquire whether it had anything in the pipeline in this regard.
“Suzuki Auto South Africa’s commitment remains to provide vehicles of superior value and to support both dealer operations and provide the best service to customers,” said a company representative.
“The establishment of local production facilities depends on many factors, and at this current stage, we cannot comment on our strategy to establish such a local production facility in South Africa.”
The silver lining is that Suzuki didn’t outright deny that such plans exist, but it’s answer doesn’t particularly inspire any confidence that a Suzuki factory will call Mzansi its home in the near future.
Suzuki factory feasibility
One of the big questions Suzuki is no doubt asking itself is whether the removal of import duties would offset South Africa’s higher labour costs in comparison to India, where most of its cars are made.
The vehicles it imports to the country at the moment are subject to several levies, most importantly import duties of as high as 25%.
It’s difficult to determine exactly how much this duty impacts the price of Suzuki vehicles without knowing the value of an imported unit without any markups or taxes, but we can be assured that it significantly raises the prices dealers can ask for them.
Meanwhile, the minimum wage in South Africa sits at R28.79 per hour.
As per India Briefing, India offers the most competitive labour costs in Asia, with the national-level minimum wage at around INR178 (R37.48) per nine-hour day, working out to R4.16 per hour, or 85% lower than South Africa’s minimum wages.
This significant difference suggests Suzuki would have to employ far fewer people in South Africa than it does in India should it want to come out ahead or just match operational costs, even if it no longer pays import duties.
Another key element for making a local car factory work would be a sufficient export base.
The South African car market is quite small in the grand scheme of things and may not be lucrative enough without exports.
The question is, therefore, to where can Suzuki export vehicles to make a domestic factory worth its while?
The obvious answer is Africa – the “final frontier” for car companies.
Admittedly, Africa is enormous, but its vehicle ownership figures are anything but.
The “motorisation average” in Africa is around 42 vehicles per 1,000 people, whereas in developed markets like the European Union, the average sits at a considerably higher 567 vehicles per 1,000 people.
The continent is also filled with dumped cars from first-world countries, such as old Mercedes-Benzes and Toyotas, that are cheap and simple to repair and have few electronics that can go haywire – both necessities in the harsh African landscape.
As such, it isn’t the easiest market to penetrate and, at least right now, probably can’t support the sales volumes required from mass-market brands to invest in a certain country.
While Europe and the United Kingdom are options where Suzuki could send its locally made cars to – as is being done by BMW, Ford, and VW – they’re geographically not much closer to South Africa than they are to India.
If Suzuki were to target these regions there’s a good chance it would have to compromise its Indian exports to support its South African shipments, which is unlikely to go down well with HQ.
South Africa’s high labour costs combined with the limited potential for exports doesn’t bode well for the establishment of a Suzuki factory, but as we’ve learned from automakers’ radical decisions in the past, you can never say never.
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