Warning from major South African employer

Being kicked out of the Africa Growth and Opportunity Act (Agoa) would devastate South Africa’s motor industry and result in the closure of hundreds of suppliers.
This is according to Billy Tom, president of the National Association of Automobile Manufacturers of South Africa (Naamsa), who told the Sunday Times that exports to the US increased by 498% from Agoa’s inception in 2001 to 2023.
It would also significantly impact suppliers, with Agoa having created 85,000 direct and 426,000 indirect jobs, said Tom, who is also the CEO of Isuzu Motors South Africa.
The automotive industry is the largest player in South Africa’s manufacturing industry, directly employing an estimated 110,000 people, with 500,000 involved within the greater value chain.
In 2021, it contributed close to 5% of the country’s annual gross domestic product.
Agoa, enacted by the US in 2000, aims to provide select sub-Saharan countries with duty-free access to the US market.
Tom said the US is South Africa’s third-largest export destination, bringing in R24.1 billion in 2023.
However, South Africa’s international relations, such as the amicable ties with Russia, China, and Iran and a more hostile relationship with Israel, have resulted in the Republican Party wanting South Africa kicked out of the trade deal.
Because South Africa exports two vehicles for every three produced, Tom says that without international trade, the country does not have a viable automotive industry.
Losing the country’s third-largest market would considerably decrease the industry’s viability, he added.
Two of the local industry’s most prominent players, BMW and Mercedes Benz, may reconsider production in South Africa, said Tom, which would further impact the sector.
Although he believes the industry could be strengthened by boosting trade with African auto hubs, such as Morocco and Egypt, Tom said this would do very little to compensate for the Agoa loss.
China’s production of electric vehicles has also hurt South Africa’s exports of internal combustion engine vehicles.
Data from the Naamsa showed that carmakers in the country exported 23% fewer vehicles in 2024 than in the year before.
Passenger vehicle exports fell by 25% year-on-year, light commercial vehicle exports by 18%, and truck and bus exports by 19%.

There are two primary reasons behind the popularity of affordable Chinese EVs in Europe: the upcoming ban on the sale of internal combustion engine vehicles and the fact that Chinese carmakers can produce and sell EVs at an affordable price.
The former relates to the European Union’s (EU’s) commitment to ensure that all new cars sold on the market do not emit carbon dioxide by 2035.
“This is to ensure that by 2050, the transport sector can become carbon-neutral,” the EU said.
The latter is partly due to government assistance, making China the leading manufacturer of affordable electric cars.
However, Naamsa’s head of commerce and research, Norman Lamprecht, notes that the 23% year-on-year decline may appear worse than it is, as 2023 was a record year for vehicle exports out of South Africa.
399,594 units were exported to 148 countries, roughly 14% more exports than in the year before.
Chinese-made vehicles, including electric, hybrid, and internal combustion, aren’t only taking Europe by storm; they have also proven immensely popular in South Africa due to the value they offer.
Chinese brands like GWM, Chery, and BYD offer vehicles that are affordable, high-quality, and highly competitive in technology and luxury.
Lamprecht previously told Daily Investor that Chinese brands have leveraged the need for value to grow rapidly in South Africa.
Two brands in particular, GWM and Chery, have been available in the country for several years, and their annual sales figures have grown rapidly over the past 10 years.
Combined, the two brands sold 1,725 units in 2014, and 10 years later, they sold 31,897 units in a single year.
They have also frequently appeared in Naamsa’s monthly list of the country’s top 10 best-selling brands in recent years.
A lot of this growth has come in recent years. According to data from Standard Bank, the proportion of Chinese vehicles financed through the bank grew from 20% in 2022 to 36% in July 2024.