Hundreds of billions of rands have been invested in South Africa’s automotive sector, which by 2023 was already worth more than R500 billion per year.
This is according to Drive.co.za, which notes that South Africa is fortunate to possess an independent, multi-brand, automotive industry.
The car subscription company adds that the sector plays an indispensable role in providing mobility to all South Africans, promoting consumer choice and maintaining vehicles.
It adds that the automotive sector also provides ample facilities for refuelling and shopping convenience.
Based on data from sources including Stats SA and the Automotive Business Council (Naamsa), the local automotive industry contributes to 4.9% of the country’s GDP.
The manufacturing and retail segments of the sector are responsible for the estimated combined employment of 580,000 individuals – including estimates for petrol garage workers, among others.
According to Drive.co.za, since South Africa’s transition to democracy, approximately R130 billion has been invested in the industry by domestic original equipment manufacturers (OEMs).
Vehicle and component manufacturers make up the country’s largest manufacturing sector, contributing 17.7% of South Africa’s total factory output in 2023, valued at R537 billion.
In the same year, vehicle and component exports amounted to more than R240 billion, crowning the industry as the third-largest generator of foreign exchange, with minerals and precious metals the only larger export earners.
Drive.co.za explains that it is against this background that current and likely future trends in business activity in the local motor industry value chain should be taken seriously by policymakers.
This, it says, must be done to ensure that policies are in place to prevent job losses, whilst also maintaining South Africa’s competitiveness through sufficient economies of scale.
South Africa’s automotive sector grew again last year
According to Drive.co.za’s Drive Motor Index (DMI), South Africa’s automotive sector reported positive growth during 2025, improving by more than 5% across the past four quarters.
The index measures the real percentage change in key indicators within the local motor vehicle industry.
It comprises twelve indicators, each weighted according to its perceived importance in gauging the overall state of the automotive sector in South Africa.
According to the index, the country’s four-quarter average improved by 5.6% on the back of declining interest rates, after previously bottoming out.
South Africa’s prime lending rate was lowered by 150 basis points, reaching 10.25% from a high of 11.75% in May 2023.
Drive.co.za notes that it is unfortunate that the repo rate has not been lowered further, but adds that interest rates may still come down further this year, especially due to a sharp decline in South Africa’s benchmark long-term interest rate.
Despite declines in seven of the DMI’s twelve indicators, those that carry the highest weighting managed to perform well in 2025, resulting in an overall increase of 5%.
This is a growth rate more than double the latest year-on-year real GDP growth of 2%, recorded during 2025.
While vehicle and component exports managed to increase year-on-year, the DMI highlighted the double-digit quarter-on-quarter decline as a concern, particularly against increasing global competition.
Drive.co.za notes that the sector’s importance warrants the attention of the Department of Trade, Industry and Competition to review its policies on local subsidisation and anti-dumping tariffs.
Local vehicle sales also increased by 16% year-on-year in 2025, while the DMI recorded a year-on-year decline in the value of used vehicle sales, which could be due to higher vehicle inventory and discounts.
Drive.co.za notes that the National Budget provided taxpayers with a windfall of nearly R14 billion, as well as new policies aimed at expanding the country’s infrastructure.
As a result, the DMI is poised to continue upward momentum throughout 2026, while any potential interest rate cuts could only strengthen the sector.
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