By IDO LEKOTA
The recent takeover of the Rosslyn auto manufacturing plant following the Nissan scale back – wherein Chery has committed to retaining all 692 existing employees while creating 3000 direct and indirect jobs – raises pertinent questions about the future of a much-needed sustainable manufacturing sector in the country.
As it is, the Chery takeover, is a powerful example of the state’s broader industrial logic in practice: keep a plant in operation, preserve the workforce, and avoid a sudden shock to suppliers and households. It also shows why such interventions are politically attractive, because they produce visible short term gains in employment and continuity. At the same time, the fact that the deal is being celebrated as a major industrial win also shows how dependent the sector remains on large external investors and policy support to keep production local.
There is no question that SA’s automotive industry needs support, the question is what kind of support. Unfortunately, currently, the debate around that support is often framed as a choice between protecting factories and leaving them to the market, yet that is too simple a solution. The real question is whether public policy is building a sector that can eventually stand on its own or whether it is locking taxpayers into a long-term subsidy arrangement. Any serious transition plan should do the first, not the second.
At the moment, South Africa’s approach leans heavily on incentives to keep vehicle assembly local and to attract global manufacturers. That has helped preserve industrial activity, protect some jobs, and maintain the country’s place in global vehicle production. For example, the Automotive Investment Scheme is explicitly designed to grow the sector through investment in new or replacement models and components, increase plant volumes, sustain employment, and strengthen the automotive value chain.
The scheme also offers cash grants of 20% of qualifying investment for original equipment manufacturers and 25% for component and tooling companies, which shows how strongly the state is leaning on direct support to shape investment decisions. In 2024, the government said the scheme had supported more than 150 projects, generated over R76 billion in investment, and helped create and retain thousands of jobs, which is a clear sign that the model has preserved industrial activity rather than allowing it to collapse. The Chery takeover of Nissan’s Rosslyn plant is a good example of how this approach works in practice: state-backed incentives and policy support help keep assembly local, preserve jobs, and attract new investment when a legacy manufacturer pulls back.
But preserving activity is not the same as building long-term competitiveness. South Africa still faces high electricity costs, weak logistics, and a difficult investment climate, which means support can easily become a crutch rather than a bridge.
The government’s own automotive master plan recognises that the sector must improve its export performance, deepen local value addition, and become more competitive if it is to grow sustainably. That is the crucial point. The current system can protect plants and jobs in the short run, but if firms cannot compete without heavy public support, then the country is only delaying the bigger adjustment.
That is why the alternative transition plan matters. Instead of broad production subsidies, the state should move toward more targeted support that fixes the underlying cost problems. The first priority should be infrastructure: electricity reliability, freight rail, ports, roads, and customs efficiency. These are not abstract improvements. They directly affect whether a plant can produce at a global cost level. If a manufacturer spends less time waiting for power or moving parts through congested ports, its costs fall and its competitiveness improves. That is a better use of public money than simply paying firms to remain where they already are.
The second priority should be supplier development. A strong auto sector is not just a final assembly line. It depends on a network of component makers, toolmakers, logistics firms, maintenance providers, and technical services. If those suppliers remain weak, local content stays shallow and the industry continues to rely on imported inputs. Government support should therefore focus more on smaller firms that need financing, technology upgrades, and quality certification. That builds a broader industrial base and spreads the benefits more widely than support for a few large plants.
The third priority should be skills. The industry is shifting toward new energy vehicles, digital production systems, and more advanced manufacturing processes. South Africa cannot make that shift successfully without technicians, engineers, and workers who are trained for the next generation of production. Public support should therefore include apprenticeships, technical education, and partnerships between firms and training institutions. This is slower than subsidy payments, but it creates capability that lasts longer than a single investment cycle.
The fourth priority should be conditional support. If the state gives incentives, it should do so with clear targets and time limits. Those targets should include export growth, local procurement, investment in skills, and technology transfer. If firms fail to meet them, the support should fall away. That way, public money is tied to public outcomes rather than becoming a permanent business expense for large manufacturers. It also makes industrial policy more transparent and easier to defend.
The fifth priority should be the electric vehicle transition. South Africa cannot assume that the future of the industry will look like the past. Global demand is moving toward cleaner vehicles, and South Africa needs a plan that helps local firms participate in that shift rather than being left behind by it.
That means supporting charging infrastructure, battery-related value chains, and local manufacturing that can serve both domestic and export markets. If the state gets this right, it can use the transition to upgrade the industry rather than merely defend old production structures.
The comparison with the current export- and competitiveness-focused policy is straightforward. The current approach tries to keep production going and attract investors by offering strong incentives. That has produced real benefits: plants have stayed open, jobs have been protected, and South Africa has remained visible in global auto manufacturing.
But the alternative approach asks a harder question: are those incentives creating an industry that can survive on its own? The answer will only be yes if support shifts from keeping factories alive to making them truly competitive.
That is the real test. South Africa does not need to choose between industrial decline and endless subsidy. It needs a managed transition from dependence to competitiveness, with public support used more strategically and less automatically. That means fewer open-ended incentives, stronger infrastructure, better skills, deeper supplier networks, and a more honest link between state support and measurable results. Done properly, that would protect the industry without making taxpayers carry its costs forever.
