The ninth annual Toyota State of the Motor Industry (Somi) took place in Johannesburg on 12 February. Toyota South Africa Motors (TSAM) used the occasion to reveal the new cars it will launch locally in 2026 and give an overview of South Africa’s automotive industry in the present day…
TSAM's president and CEO Andrew Kirby | Image supplied
TSAM’s leader, Andrew Kirby, opened his address with an acknowledgement that Somi and Sona coincided on the same day for a second time in a row. What followed was a positive start to the facts: South Africa’s car market grew by 15,7% in 2025 with 587,000 vehicles sold, which was propelled by lower selling prices. It’s the highest number of vehicles sold in a single year since pre-Covid.
Despite the positive growth, Kirby noted that the market remained small in scale and that the numbers are yet to reach the volumes achieved in 2006 (703,000 vehicles), which is nearly twenty years ago. It’s worth noting that this year’s Somi theme was Driving Through Disruption, an apt take on what is needed of OEMs to navigate the industry’s current landscape.
“Yes, it’s a nice improvement, but we really lack scale in South Africa,” Kirby said. “If we consider our population size, our mobility needs, and the quality of our public transport, we should be a lot bigger than this. We are moving in the right direction, but we need to think very carefully about how we move into another level of scale that can support our industry overall.”
Shrinking local manufacturing share
Other than a lack of scale, Kirby pointed out that the number of vehicles sold in South Africa has declined, essentially the market has a poor CKD mix.
In 2006, around 56% of vehicles sold locally were manufactured in South Africa. That figure has steadily declined and is expected to deteriorate further in 2026. In 2025, only 33% of vehicles sold in South Africa were locally produced.
He, however, stressed that imports are not the enemy. “It is unrealistic for South Africa to produce every model for such a relatively small market. Imports create vibrancy and give consumers access to new technologies and body styles. The real question, however, is whether the balance is right,” he said.
There has long been a belief that South Africa’s manufacturing base can simply be sustained by exports. Kirby cautioned that this is not a sustainable way of looking at things.
Kirby also contextualised the 15,7% sales growth in 2025 further, noting that entry-level models across segments outperformed higher derivatives. That skewed mix, coupled with pricing adjustments, created what he described as artificial volume growth. In real terms, consumer spending remains constrained.
Export reliance raises red flags
On the production side, South Africa built just over 600,000 vehicles in 2025, with exports reaching a record 411,000 units. That is something to celebrate. However, only 198,000 of those vehicles were sold domestically. In other words, 68% of local production was exported.
Export diversification has also narrowed significantly. In 2006, South Africa had a broader spread of destinations. By 2025, 81% of exported vehicles were destined for the UK and EU markets, while only 8% went into Africa.
“The Africa market is really a tough market,” Kirby said, pointing to used imports and grey new vehicle imports routed through the Middle East as major distortions. Fleet purchases dominate, while private consumer demand remains limited. “We need to work harder to strengthen our business in Africa.”
The central message was clear: South Africa needs both a healthy domestic market and a diversified export base to sustain and grow its production footprint.
Relying almost exclusively on Europe is risky. The UK’s Zero Emission Vehicle mandate requires manufacturers to meet increasingly stringent ratios of zero-emission vehicle sales each year. The EU has similarly tightened fleet-average emissions regulations, albeit with some recent flexibility.
We are most likely in the next five years going to see a significant decline in exports to Europe and the UK.
The NEV transition gap
Another challenge is that South Africa does not yet have the competitive scale in new energy vehicle production. Kirby explained: While some NEVs are exported, their key components are not localised. Without scale, localisation is difficult. Without localisation, competitiveness is weakened. Without proper transitioning, South Africa risks a decline in exports.
He argued that the country cannot afford to fall behind in the global transition. While forecasts differ, he expects hybrids to make up the largest share of new energy vehicles sold locally by 2030, followed by battery electric vehicles and then plug-in hybrids.
Deindustrialisation concerns
Beyond the immediate market dynamics, Kirby raised a broader structural concern: manufacturing value addition. South Africa’s manufacturing value addition per capita has declined over the past 24 years, while countries such as Türkiye have significantly expanded theirs over the same period.
We are prematurely deindustrialising as a country. The question is, are we starting to see that with the local automotive sector?
Priority interventions
To turn the tide, Kirby outlined three priority areas:
First, strengthening the competitiveness of CKD manufacturing through targeted, fiscally neutral adjustments to policy. Not to eliminate imports, but to restore balance and rebuild local scale.
TSAM forecasts a 5.5% growth in the market for 2026
Second, accelerating the transition to new energy vehicles through specific, government-supported interventions that both stimulate local production and support consumer adoption.
Third, diversifying export markets, particularly within Africa, while addressing structural constraints such as logistics, energy costs and rail inefficiencies.
Kirby remains optimistic that South Africa’s market could exceed 700,000 annual vehicle sales and production could surpass 720,000 units if the right interventions are implemented.
“We do need to act now,” he said.
