Overdue changes to South Africa’s faltering motor industry policy could still be many months away despite trade, industry & competition minister Parks Tau’s recent assertion that the current review could be completed in September.
Toyota South Africa Motors president and CEO Andrew Kirby says delays in updating the automotive production & development programme (APDP) have already persuaded some foreign vehicle and components companies to reduce or postpone planned investments in South Africa.
The local industry has been pleading with the government for nearly two years for urgent interventions in the programme. Kirby says that after “detailed engagements and proposals”, it now hopes for changes “within the next 12 months”.
Toyota last week unveiled the results of a R10.4bn investment to build the latest Hilux bakkie range. The investment, the largest in Toyota’s history, includes R7.2bn to upgrade the Prospecton vehicle assembly plant in eThekwini with new production equipment, tooling and technologies.
A further R3.2bn is being spent on developing local components suppliers and increasing the percentage value of local content in the ninth-generation Hilux. Suppliers themselves are investing a further R2bn in their own facilities.
The Hilux is South Africa’s best-selling new vehicle. In the past 56 years, Prospecton has built more than 2.9-million, with exports reaching 74 markets across Africa and Europe. About 25% of production goes to the UK and EU. However, exports there will be throttled in the coming years by environmental regulations outlawing the sale of new vehicles with petrol- and diesel-powered internal combustion engines (ICE).
The Hilux range includes “mild hybrid” versions, offering a combination of ICE and electric vehicle (EV) technologies, but even these will fall foul of UK and EU rules. From 2027, stricter EU petrol and diesel quality standards, reducing ICE exhaust emissions, will add to the challenge.
Kirby says: “Customer demand for low-emission vehicles in these markets is expected and exports will drop. We see exports to the UK and EU falling significantly over the next five years.” Increased demand from the rest of Africa will mitigate some, but not all, of this loss.
The loss of exports is one of the reasons the local industry is impatient for the government to update the APDP. Its terms and targets were announced in 2018. By the time it was introduced in July 2021, Covid had turned the market upside down. Developments since then have rendered the programme’s primary 2035 goals — a doubling of industry production and employment, a 50% increase in local content and the creation of a strong black-owned industry base — unachievable.
The industry in 2026 bears little resemblance to what policy planners anticipated. Imported vehicles dominate the market, thousands of jobs have been lost, some established companies are struggling or have already left and local content has shrunk.
Among urgent industry requests are a clear and coherent EV incentive policy, protection against low-cost imports, modernisation of the outdated ad valorem luxury tax, and amendment of APDP rules that allow importers of vehicle kits to claim incentives.
Kirby also wants further incentivisation of local content. The Hilux percentage, he says, is 50%, well ahead of the industry average, but “we need a significant roadmap towards further localisation”.
He admits that Toyota’s R10.4bn Hilux investment was costed on the assumption that some APDP changes would have been made by now, and still hopes they will materialise. While it is not too late to turn around the industry’s fortunes, “we are running out of time”, he says. The industry operates on investment lead times of three to four years, so policy decisions not made now “will affect all of us through to 2029 and 2030”.
Some previous-generation Hiluxes are still being built at Prospecton but will be phased out in the first quarter of 2027. Prospecton is the oldest Toyota plant outside Japan. Besides the Hilux, it builds the Corolla Cross car, Fortuner SUV and Hiace minibus. Toyota Motor Corporation executive Shinichiro Otsuka says: “South Africa remains an important strategic production base for Toyota globally.”
The company directly employs more than 8,500 people across manufacturing, warehousing and other activities. President Cyril Ramaphosa told last week’s event: “The R10.4bn investment demonstrates precisely the type of investment that South Africa seeks to attract. The true measure of this investment is not found in machinery or buildings. Its true value lies in the opportunities it creates.”
Ramaphosa’s comments were made via video link after his presidential jet, Inkwazi, had to return to Air Force Base Waterkloof after developing technical problems on the way to eThekwini.