Policy roadblocks easing in African markets

Progress is being made in opening up Africa for trade in new vehicles assembled on the continent, according to Martina Biene, chairperson and managing director of Volkswagen Group Africa and chairperson of the African Association of Automobile Manufacturers (AAAM). It will be a game-changer that could drive African industrialisation and reindustrialisation. AAAM forecasts that the African new vehicle market has the potential to reach between three and five million vehicles by 2035, compared to the current market of 1.2 million. One of the first policy requirements is to reduce imports of used vehicles. This will create a market for new vehicles, with manufacturing investment attracted by the signing of the African Continental Free Trade Area (AfCFTA) Automotive Rules of Origin in the first half of 2026. In her 2025 report, AAAM chief executive officer Victoria Backhaus- Jerling said: “This achievement represents a critical breakthrough for the sector, providing clarity and certainty for manufacturers and investors while laying the foundation for regional value chains and intra-African trade.” The African market is vital for the future of the Volkswagen South Africa manufacturing plant in Kariega. Speaking to Freight News and other journalists at a briefing, Biehle predicted European exports of the current internal combustion- powered ranges would dry up by 2035 due to the switch to electric vehicles. The market is already predicted to shrink by 20 000 units in 2026. Europe is South Africa’s main vehicle export market. The switch to electric vehicles is hampered by government indecision and lack of scale, according to Biehle. “Strategically, as Volkswagen, we will try to maintain exports as much as we can to Europe for the next 10 years.” At the same time, VW wants to grow its share of the African market. “It is a long-term strategy to offset European exports with African exports over the course of time. “And it will not hurt if we maintain exports to Europe with new platforms,” she added. While much progress has been made, “it is a long walk to implement policies, to negotiate policies, to bring them all on the same page”. In pole position to lead VW’s drive into Africa is a new SUV developed in partnership with VW Brazil, called the Tengo. According to Biehle, it will be more competitively priced and more suited to African conditions than the high-tech vehicles required by the European market. The Kariega plant has already been adapted for the vehicle, which will be produced on the same line as the various versions of the Polo as part of a R4 billion investment. Biehle warned that decisions on future investment would be determined by policy certainty, the availability of competitively priced power, water and labour, and levelling of the playing field against Indian and Chinese imports. The clock is ticking. Decisions about the future of the plant in 2030 and beyond will be made in the next two years. She points out that the VWSA plant has to compete against other assemblers in the VW group. Speaking at the briefing, Adrian Saville, professor of economics, finance and strategy at the Gordon Institute of Business Science, said the African market was growing as the “world economic centre of gravity” moved to the global south. “And that is where we will see new products, innovation and new markets evolve.” ER