IN PICTURES | South Africa celebrated 100 years of building cars in 2024: here’s how the industry evolved
Companies that build cars in South Africa have a great deal to celebrate at present, but soon they may not.
Mzansi’s vehicle manufacturing industry turned 100 this year, something that was celebrated with much jubilation at the SA Auto Week hosted in October by Naamsa - The Automotive Business Council.
The industry has much to be proud of, with 632,972 shiny new vehicles leaving local factories in 2023, of which 63% were shipped abroad to make up 15% of SA’s total exports.
The industry, accounting for 5.1% of the country’s GDP, supports 116,000 jobs on the manufacturing side alone, and close to 400,000 on the retail and repair side.
"The automotive industry is widely regarded as one of the industrial policy success stories of South Africa’s democratic era,” Naamsa says of the industry that exported a record 399,594 vehicles in 2023.
But it was only after 1994 that it really started to thrive as an export hub.
The early days of the motor industry
Although the first ‘horseless carriage’ arrived in South Africa in 1897, it wasn’t until the 1920s that the South African vehicle market had matured to the point where local manufacture was deemed feasible.
Ford was first to set up a local factory, assembling Model T cars from Completely Knocked Down (CKD) Kits from February 1924, while General Motors (GM) followed in 1926. Interestingly both facilities were located in old wool factories in Port Elizabeth, now Gqeberha.
These were humble beginnings, with GM initially producing just 11 cars per day, and a rudimentary road network made it difficult to travel between cities, but the foundations were laid for what would eventually become a key industry for the country.
Annual new car sales increased from 13,547 in 1925 to 20,456 in 1929, with a cumulative 91,389 sold in those first five years of the country having a manufacturing industry, according to data sourced by Roger Houghton for his book '50 Years by Your Side', which chronicles Toyota's first half-decade in SA.
South Africa received its third vehicle assembly plant in 1939, on the eve of World War II, when a company called National Motor Assembly set up shop in Alberton, producing everything from Austins to Willys Jeeps and Hudsons.
As you’d expect the industry boom only came after the war, with Motor Assemblies setting up in Durban to build Chryslers, and later Fiats and Lancias, while Car Distributors Assembly started producing Packard and Nash cars in East London, later switching to Mercedes-Benz products.
The late 1940s also saw SA Motor Assemblers and Distributors setting up a factory in Uitenhage, now Kariega, to produce Studebakers and Austin A40s, but that operation would eventually become Volkswagen SA!
The late 1940s saw a significant surge in demand, but cars and raw materials were often in short supply. In fact, Ford and GM dealers were sometimes even happy to stock cars with makeshift wooden bumpers when steel was in short supply, as recorded in Fred Schetler’s book, ‘A Century of Cars’, a gem if you can get your hands on a copy.
The good times rolled on through the 1950s with Austin and Chrysler setting up their own factories in Cape Town, and while the ‘Yank Tanks’ enjoyed a golden era, by the 1960s South Africans had started to gravitate towards smaller cars. In 1961, the Volkswagen Beetle was South Africa’s best-selling car with 9,279 sales, followed by the Opel Rekord (6,236) and Ford’s Zephyr (6,065) and Angila (4,790), according to Schnetler.
But it was also a period of political strife as the injustices of apartheid became further entrenched, while its cracks started becoming visible to the world through horrific events like the Sharpeville Massacre.
South Africa became a republic, leaving the Commonwealth behind, while local content policies introduced for the motor industry saw the number of manufacturers double from eight to 16 between 1961 and 1970, according to UNCTAD.
The local content requirements were in part necessitated by South Africa’s lack of foreign exchange but they did also protect the local industry from imports.
The downside was a proliferation of assembly facilities often investing heavily in low-volume production of cars, which made the whole exercise, including the eventual cars, somewhat expensive.
The ‘swinging’ sixties also brought the rise of the Japanese, and 1965 saw Datsun setting up shop in Rosslyn and Toyota taking over Motor Assemblies in Durban.
The latter was founded by businessman Albert Wessels, who famously drew smirks from employees for his habit of parking his Rolls Royce by thunk, or ‘feel’ as he might have called it, but Wessels was a ‘big picture’ visionary who always had a knack for hiring the best executives, as documented by Harvey Thomas in his book ‘Never Say Goodbye’.
By 1980 Toyota had surpassed Sigma to become the country’s number one selling car company and the rest is history.
The latter half of the 20th century also saw some interesting local automotive creations, such as the fibreglass-bodied GSM Dart and Flamingo sports cars, and the Triumph-based Protea.
Local manufacturers created some legendary performance cars in order to homologate their racing efforts, with cars like the Alfa Romeo GTV6 3.0, Ford Sierra XR8, BMW 325i S and Opel Kadett Superboss all coming to life under local sunny skies, and let’s not forget Basil Green’s iconic Capri Perana.
There was no shortage of spicy local creations aimed at ordinary folk, with cars like the Volkswagen Citi Golf, Toyota Conquest RSI and Mazda 323 EGI all bringing new meaning to the term pocket rocket.
Ford also locally designed two bakkies, the Bantam (subsequently based on the Escort, Mazda 323 and Fiesta through three generations) as well as the Cortina one-tonner.
South Africa saw a wave of divestment following PW Botha’s disastrous Rubicon speech of 1985, with GM exiting in 1986 and Ford in 1988, but their brands and manufacturing facilities were kept alive, under licence, by local firms Delta and Samcor.
The 1990s and the dismantling of apartheid brought a new wave of optimism to the industry.
But with the dawn of democracy in 1994, it soon became apparent that assembling a high quantity of low volume cars simply wouldn’t cut it in a modern economy that was once again opening itself up to the world.
Something had to change, and quickly. Thankfully that change came in the form of the Motor Industry Development Programme (MIDP), first introduced in 1995. This radical policy shift reduced import tariffs while providing strong financial incentive for exporting.
This, combined with access to international markets through South Africa’s Free Trade Agreement with the European Union and the USA’s African Growth and Opportunity Act (Agoa) has seen local exports thrive since the early 2000s.
Volkswagen, which got the ball rolling in the early 1990s already with a contract to supply China with 12,500 left-hand drive Jetta 2s, reached a milestone of 1.5 million exports earlier this year, with its current export hero being the Polo. This year also saw Ford SA produce its millionth Ranger, another prolific export.
Other early export products from Mzansi were the BMW 3 Series, later replaced by the X3, and the Toyota Corolla, while the Mercedes C-Class remains a top export to this day.
The MIDP was replaced by the Automotive Production and Development Programme (APDP) in 2013, and its second phase will lead the industry into 2035. The primary difference is that the APDP is focused on incentivising production rather than exports.
Yet the country is still a long way from the annual vehicle production target of 1.2 million units a year set by the Department of Trade and Industry (DTI) in 2008, and there are many question marks surrounding the industry’s ability to survive and thrive in the electrified era.
Of particular concern is that the European Union, which is our largest export destination, plans to ban the sale of petrol and diesel powered vehicles from 2035.
President Cyril Ramaphosa, speaking at SA Auto Week recently, admitted that the global decarbonisation shift presented a significant challenge to the local auto industry, but said government was committed to working closely with the sector.
He also used the event to announce that the country was close to finalising a New Energy Vehicle (NEV) policy that would incentivise both the sale and production of electric vehicles as well as hybrids.
But it’s more than just the shift to NEVs that keeps industry leaders up at night. In 2023, Volkswagen’s global brand head Thomas Schäfer and Ford SA CEO Neale Hill both expressed concern about the future viability of local vehicle manufacturing, citing numerous challenges including electricity supply and logistical hurdles, particularly at the ports.
At Auto Week, Ramaphosa said the government remained committed to improving the operational performance of the country’s energy, freight and logistics sectors.
This, and the effectiveness of the NEV policies, will ultimately determine whether the local motor industry survives into the next decade.
The figure 600,000 sounds like an enormous volume of cars, and it is, but it’s just 0.67% of the global total, with SA ranking 22nd for global vehicle production.
It’s an industry that fills us with pride, but it’s not too big to fail, as Australia’s motor manufacturing implosion illustrates all too well.
A great deal is riding on your government’s promises, Mr President!
IOL