VW boss warns automotive industry is at breaking point

In a desperate attempt to help reach out to the government, Volkswagen Group Africa (VWGA) boss Martina Biene has written a letter to President Cyril Ramaphosa pleading for concise decision-making on policies to help safeguard the embattled local automotive manufacturing industry from imploding.

Local vehicle manufacturing, which provides tens of thousands of direct jobs across seven major assembly plants and hundreds of thousands more down the supply chain, is on a downward spiral that economic analysts fear could eventually result in complete deindustrialisation.

This will be a hammer blow to the economy as the industry made up 5.2% of South Africa’s gross domestic product last year.

VW warns make-or-break year looms as weak automotive policy

While increasing imports from China and India and the US’ import tax increases are contributing factors to the bleak outlook, Biene is confident urgent improvement in South African manufacturing policies can help them weather the storm.

She says the policy framework should allow for more competitive production of new energy vehicles, for which the global demand is growing by the day.

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“The current automotive policy is not working anymore. The industry is not growing,” Biene, chair and managing director of VWGA, said during Volkswagen’s annual product indaba in Kariega on Wednesday night.

“This is a make-or-break year for the industry. I wrote a letter to the president prior to Christmas in which I urged government to make the crucial decisions that are needed for business.

“We’ve had valuable interactions with Parks Tau [minister of trade and industry] last year. There was a good understanding, and they took lots of notes, but nothing happened. That is why I wrote to the president, but the unfortunate thing is that he didn’t reply to me.”

Facilities are struggling

While the BMW plant in Rosslyn last year built a record 79  000 cars, other facilities have been struggling.

The future of the Mercedes-Benz plant in East London is unclear, also with the US tariffs threat.

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Ford recently laid off hundreds of workers at its bakkie plant in Silverton and engine factory in Gqeberha, and Nissan is pulling the plug on its long-running assembly operation in Rosslyn.

Chinese manufacturer Chery is set to take over this facility.

Neale Hill, president of Ford Africa, hit out at the government in 2023 over challenges facing the industry, such as load shedding, backlog at ports, and the dysfunctional railway network.

Industry ‘better now’ but not secure

Biene said while things “are better now, the climate still doesn’t provide the securities to keep investors in the country.

The total of 610 000 units built locally in 2025 was well below the estimated 878 000. According to Biene, the fact 71% of these were exported and 68% of the export quota is assigned to Europe are ominous sign for the industry.

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