South Africa's Department of Trade, Industry and Competition (dtic) has acknowledged that progress toward the goals of the South African Automotive Masterplan (SAAM 2035) is stalling. The SAAM 2035, released in 2016, originally targeted an annual production of 1.3 million to 1.5 million vehicles by 2035. The dtic’s admission was made in its Industrial Development Strategy (IDS) 2026, where it explicitly stated that progress toward SAAM 2035 goals was stalling. Data indicates that only 616,466 units were produced in 2025, significantly missing the plan's ambitious production target of 1.3 million units for 2035. This shortfall notes challenges in achieving the masterplan's objectives within the automotive sector. The dtic's candid assessment shows the need for strategic adjustments to re-energize the industry and put it back on track to meet its long-term aspirations.
Struggling to Meet Production and Localization Goals
The South African Automotive Masterplan 2035 (SAAM 2035) included a target to increase local content in vehicles assembled within the country to as much as 60% by 2035. This localization objective was designed to strengthen the domestic supply chain and create jobs. The masterplan envisioned a strong ecosystem where a significant portion of vehicle components would be sourced locally, thereby boosting domestic manufacturing capabilities and economic growth. However, the Department of Trade, Industry and Competition (dtic) has indicated that progress on this front is lagging, presenting a significant hurdle to the overall success of the SAAM 2035.
Current data shows that the localization rate for South African-assembled vehicles stands at 39%. This figure remains significantly below the ambitious 60% target set by the SAAM 2035, showing challenges in integrating more local components into the automotive manufacturing process. The shortfall reflects difficulties in developing a strong local supplier base capable of meeting the industry's volume and quality requirements. Achieving the 60% localization target by 2035 will require substantial investment and coordinated efforts across the value chain, from raw material suppliers to component manufacturers.
Beyond localization, the SAAM 2035 also aimed for South Africa to achieve a 1% share of global vehicle production. This target was set to position South Africa as a significant player in the international automotive landscape, leveraging its manufacturing capacity and strategic location. In 2025, the country accounted for 0.62% of worldwide vehicle output. This production share falls short of the masterplan's goal, further noting the difficulties in scaling up manufacturing operations to the desired level. The dtic's assessment acknowledges these missed targets across both production volume and local content integration, indicating a broader struggle to meet the ambitious benchmarks set forth in the masterplan.
Employment and Global Competitiveness Lag
The South African Automotive Masterplan (SAAM 2035) included a target to increase employment within the automotive sector to 224,000 jobs by the year 2035. This objective was part of a broader strategy to boost the industry's contribution to the national economy and create sustainable job opportunities, recognizing the automotive sector's potential as a major employer. The Department of Trade, Industry and Competition (dtic) indicated that achieving this employment goal is proving challenging, raising concerns about the sector's capacity to generate the anticipated number of new positions.
Current data shows that the automotive sector currently employs approximately 115,000 people. This figure is significantly below the 224,000 job target set for 2035, noting a substantial gap in employment growth within the industry. The shortfall suggests that the sector has not yet expanded sufficiently to generate the anticipated number of new positions, reflecting difficulties in meeting the masterplan's ambitious employment objectives. The gap of over 100,000 jobs shows the magnitude of the challenge and the need for accelerated growth and investment to realize the employment targets.
New Strategies for Job Protection and Future Markets
To address the challenges, the Department of Trade, Industry and Competition (dtic) is considering supporting completely knocked down (CKD) assemblies. This strategy aims to protect existing jobs within the automotive sector and help the industry navigate evolving environmental legislation. The dtic stated, "These measures will assist the industry to remain globally competitive and attract new investors into the country." By supporting CKD operations, South Africa seeks to maintain its manufacturing base and adapt to new market demands while safeguarding employment.
One example of this approach is the BAIC plant in the Eastern Cape, which currently utilizes CKD processes to assemble Foton bakkies. This demonstrates a practical application of the CKD strategy within the country's automotive manufacturing landscape. In a related development, Mahindra signed a memorandum of understanding (MoU) with the Industrial Development Corporation (IDC). The MoU outlines a study into the potential establishment of a CKD vehicle assembly facility in South Africa. Such initiatives are becoming key as the industry faces significant shifts, including Europe's plan to ban the importing of Internal Combustion Engine (ICE) vehicles by 2035. This impending ban necessitates strategic adjustments for South African manufacturers to maintain export markets and competitiveness, making the focus on CKD and other adaptive measures even more critical.
Leveraging Local Resources for NEV Growth
South Africa possesses significant potential in the global new energy vehicle (NEV) and renewable energy storage sectors, attributed to its deposits of key minerals such as lithium, copper, cobalt, and manganese. These abundant natural resources provide a strategic advantage for the country to become a hub for NEV manufacturing and associated technologies. The Department of Trade, Industry and Competition (dtic) is currently exploring options to scale up existing incentives for the manufacturing of New Energy Vehicles within the country. This proactive approach aims to capitalize on South Africa's mineral wealth and integrate it into the global NEV supply chain.
Such production incentives are considered essential for the sector to retain access to key export markets, particularly in Europe, which is rapidly transitioning towards electric mobility. The dtic stated, "These measures will assist the industry to remain globally competitive and attract new investors into the country." The emphasis on NEV production is not merely about meeting environmental standards but also about securing future economic viability and market relevance for South Africa's automotive industry. In 2025, New Energy Vehicles constituted 75.7% of South Africa's total vehicle exports, noting the growing importance of this segment for the country's export revenue and industrial future. This significant export share shows the strategic necessity of further developing the NEV manufacturing sector to maintain and expand South Africa's footprint in global automotive trade.
