South Africa’s automotive industry is in the midst of a strategic inflection point. Anchored by the South African Automotive Masterplan (SAAM 2035) and driven by an evolving policy and incentive framework, the sector is not only pursuing global competitiveness, but also reshaping itself as a vehicle for inclusive economic empowerment.

This policy evolution reflects a deliberate, state-backed attempt to align industrial development with social redress. As we reflect on how far the sector has come and where it’s going, the synergies between production incentives, transformation mandates, and localisation goals reveal a compelling blueprint for economic reform.

 

From export growth to empowerment: A policy evolution

The journey began with the Motor Industry Development Programme (MIDP) in 1995, which helped convert South Africa’s inward-looking auto sector into an export powerhouse. The transition to the Automotive Production and Development Programme (APDP) in 2013, and subsequently APDP Phase 2 (APDP2) in 2021, marked a pivot, one where localisation and transformation were placed at the heart of industrial policy.

In parallel, the Automotive Investment Scheme (AIS) was launched to stimulate capital expenditure in vehicle and component manufacturing. However, by 2023, policy signals became explicit: Investment without transformation would no longer suffice.

In December 2023, the dtic issued a Gazette mandating that all APDP2 participants must either:

• Achieve B-BBEE Level 4 by January 2025, or
• Enter the Automotive Industry Transformation Fund (AITF) with defined transformation milestones and a 10-year financial commitment.

This was a definitive moment, placing empowerment front and centre of economic competitiveness.

 

Why B-BBEE Level 4 is non-negotiable

As of January 2025, any OEM or supplier in the automotive value chain failing to meet at least Level 4 B-BBEE compliance is at risk of losing eligibility for APDP2 incentives and AIS grants. More critically, they may become non-compliant with procurement requirements from major OEMs, jeopardising supplier relationships.

Maintaining this B-BBEE threshold is not a once-off compliance check; it’s a strategic imperative embedded in a company’s eligibility for:

• Duty rebates via APDP2 Production Rebate Certificates
• Reimbursable capital grants via AIS (up to 30% for NEVs)
• Access to OEM procurement and localisation opportunities
• Market access for Tier 1–3 suppliers and new black-owned entrants

Transformation is no longer a peripheral KPI, it’s a core business continuity metric.

 

The Automotive Industry Transformation Fund: A sector-wide equity equivalent

Launched in 2020 with a R6 billion commitment from BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota, and Volkswagen, the AITF is a sector-wide Equity Equivalent Investment Programme. It supports black-owned automotive businesses through:

• Developmental funding
• Market access enablement
• Capacity-building and mentorship

The fund’s dual-contribution model (cash investment and market access creation) offers a practical, measurable approach to transformation. Participants must annually demonstrate progress towards a 10-year target, making transformation efforts both auditable and impactful.

Notably, participation in the AITF does not contribute to a measured entity’s B-BBEE scorecard. It is a parallel compliance track, designed for multinationals that may be structurally limited in achieving equity targets under the standard B-BBEE codes.

 

Towards 2035: Industrial policy and empowerment in sync

The goals of SAAM 2035 are ambitious:

• Increase local vehicle production to 1.4 million units
• Raise local content levels to 60%
• Double employment in the automotive value chain
• Ensure all OEMs and suppliers achieve B-BBEE Level 4 or better
• Transition to electric and energy-efficient vehicles (NEVs/EEVs)

In this ecosystem, transformation is not just a legislative checkbox. It is the enabler of supply chain integration, market relevance, and sustained investment confidence.

By linking incentive access to compliance and expanding empowerment into every corner of the value chain, South Africa’s automotive policy model may well serve as a blueprint for other sectors grappling with how to embed inclusive growth into industrial strategy.

 

Conclusion: Empowerment is the new engine

As the automotive sector accelerates toward localisation, electrification, and regional expansion, empowerment is emerging not as a constraint—but as a competitive advantage. Whether through direct B-BBEE scorecard compliance or structured participation in the AITF, transformation is now a core engine of growth.

For policy-makers, OEMs, and component suppliers alike, the path is clear: Transformation is not an act of compliance, but a long-term business enabler that builds resilience, expands opportunity, and secures South Africa’s position in the global automotive value chain.