No room for “doom and fume” in the car industry

Arthur Goldstuck | CEO | World Wide Worx  | Editor-in-Chief | Gadget.co.za | mail me |

The surge of lower-cost, higher-tech Chinese car brands into South African showrooms has sparked what we can only call “doom and fume”.

Doom about shrinking margins, and incensed fuming about uneven competition, has become an almost prevailing narrative among “traditional” manufacturers with a long-established presence in the country. This climate of doom and fume continues to dominate industry conversations.

It is refreshing, then, to hear one of the longest-established of these brands telling the incumbents to get their act together.

Leadership over lament

The ninth annual State of the Motor Industry (SOMI), hosted by Toyota South Africa Motors, could easily have hurled more burning coals at the supposed “foreign invaders”. Instead, a cooler head prevailed. Toyota SA CEO Andrew Kirby used the platform to call on the industry to become more resilient. In doing so, he shifted the tone away from Doom and fume toward strategic adaptation.

Not that it was all in their court. He also emphasised the need for a balanced import and local manufacturing approach. In addition, he stressed the importance of government support for New Energy Vehicle (NEV) production.

Of course, everyone talks about disruptions. We do know that we live in a fairly uncertain time, both globally and in South Africa. The question is, how do we respond to that? It is more difficult to plan and forecast. It is more difficult to anticipate what 2026 is going to bring. It is also difficult to anticipate the next five to 10 years, which is crucial for us in our planning horizons. However, that reality means that we, as an industry, need to be far more resilient. We need mechanisms that allow us to adapt quickly and respond to these changing trends.

Sales growth in context

South Africa’s 15.7% rise in new vehicle sales in 2025 lifted volumes back above 2019 levels. Volumes reached roughly 600,000 units. Kirby offered a sober historical perspective.

Yes, this is the first time that we are seeing volumes higher than the pre-COVID-19 years. However, volumes are not as high as in 2006-7. They are certainly not where they were from 2012 to 2016. So it’s a fairly pedestrian market. We really lack scale in South Africa. However, if we consider our population size, if we consider the mobility needs, and if we consider the quality of our public transport, we should be a lot bigger.

GDP growth of 1.2% provided additional perspective for the sales increase. Within each segment, it was the entry-level models that grew faster than all the others. That pattern created an artificial growth in volume.

Production strength and export risk

However, production rose to just over 600,000 vehicles. Exports reached 411,000 units. This is definitely something to celebrate. It makes a huge contribution to our economy, especially in terms of forex. But creating jobs and creating skills are very, very important to us.

We’re now at a point where 68% of all the vehicles manufactured in SA are exported. Only 198,000 are sold in SA. 81% of all vehicles exported went to the UK and the EU. We used to export 19% of our vehicles into Africa. Now it is 8%. The African market is really a tough market. So we do need to work harder to strengthen our business in Africa.

Right there lies the attitude that separates leaders and survivors from those who throw up their hands in despair. Rather than defaulting to doom and fume, Kirby pointed to measurable gaps and strategic responses.

The new energy imperative

Yet a massive responsibility rests on the government. It must support the new energy roadmap of car makers. It must also prepare for the eventual collapse in exports of fuel-driven vehicles.

We are most likely, over the next five years, going to see a significant decline in exports to Europe and the UK. Most big markets around the world have put specific interventions into place. They support customers. They support the business. Big markets create penalties and incentives to accelerate the transition to new energy vehicles.

There are very few, if any, markets that have naturally progressed into new energy vehicles. The value proposition is not there yet. Therefore, we need specific government support and interventions to back investments in low-scale New Energy Vehicle production. We also need to support the customer transition.

If we say we can’t afford to transition, we are effectively saying we will also give up on exports. The result would see South Africa become “a rearguard manufacturer of old conventional technology”. In that context, doom and fume offer no viable strategy. Adaptability does. It’s not the strongest of the species that survives, nor the most intelligent. It’s the one that’s the most adaptable to change.