How much money was spent building cars in South Africa last year

Last year, the seven major vehicle manufacturers with operations in South Africa – BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and VW – spent a combined R7.1 billion to produce cars on local soil, according to Naamsa’s four-quarter business review.
This substantial sum spanned approximately R204 million allocated to land and buildings, R465 million to support infrastructure such as computer systems and research, and R6.4 billion to production and export investment.
“The continued high levels in capital expenditure are due to investment projects by manufacturers in terms of the Automotive Production Development Programme [APDP] and APDP2, which are normally spread over multiple years and linked to new generation model investments and higher levels of production for export markets,” said Naamsa.
The following table details the aggregate capital expenditure reported by the automakers, in rand millions:
The R7.1 billion spent in 2022 reflects a decrease of nearly 20% when compared to 2021, and a more surprising 23% drop in relation to 2020 when the Covid-19 pandemic was in full force.
Considering the money is spent on increasing production for export and falls in line with new model introductions, the big discrepancy between the years could be a result of several major manufacturers investing in upgrades for their South African facilities in preparation for the production of their most popular next-generation vehicles.
The W206-generation of the evergreen Mercedes-Benz C-Class launched globally in early 2021 and locally later in the year, and the four-door version of the car is built in East London at an impressive factory.
The next-generation Ford Ranger and VW Amarok, too, saw the American manufacturer invest a total of R15.8 billion in early 2021 to enhance its facilities in Pretoria to be capable of producing 200,000 examples of the bakkie each year to higher quality standards than ever before.
Similarly, the VW Polo is one of the more prolific of the country’s vehicle exports being assembled in Kariega, Eastern Cape, and it saw a thoroughly-refreshed version reach the market towards the end of 2021/start of 2022.
The new Nissan Navara, too, debuted in 2021 and it marked the first time the bakkie was produced in South Africa, with the factory situated in Rosslyn, Pretoria.
Another vehicle built in Rosslyn, the popular BMW X3, was also updated in late 2021.
All these new generations and mid-cycle updates necessitated changes and upgrades to the manufacturer’s facilities, resulting in substantial capital being invested in the years before they reached the market.
Exports on track to trump local sales in 2023
Despite the declining capital expenditure in the domestic manufacturing segment, vehicle exports are on track to beat new-vehicle sales in the country in 2023.
Total car shipments are projected to increase by 8% to 380,900 this year, while domestic sales are only expected to grow by 3% to 375,000 vehicles.
“The impact of the economic downturn, protracted geopolitical conflict risks, and power cuts which affect cost and the ability to do business in South Africa, remain major concerns for 2023,” said Naamsa.
“However, prospects for vehicle shipment growth remain optimistic on the back of further new model introductions by major exporters in the domestic market.”