In support of South Africa's industrialisation agenda and the objectives of the South African Automotive Masterplan 2035 (SAAM), the Localisation Support Fund (LSF) commissioned a comprehensive study to identify the most feasible and commercially viable opportunities for deeper localisation in the automotive aftermarket. The study, conducted by EY (Ernst and Young Advisory Services Pty Ltd), represents one of the first data-driven assessments of the aftermarket's size, composition, and localisation potential in the South African context.
The aftermarket -- components fitted or replaced after on-line OEM assembly -- is harder to define, measure, and regulate than the original equipment (OE) supply chain. Yet the sector is large, structurally stable, and growing. The study estimates its total value at approximately R106 billion in 2025 prices, with annual growth of 7--10% expected through the decade. Despite this scale, the sector has largely been overlooked by industrial policy instruments that remain oriented toward OEM assembly and OE supply chains.
The study applied a rigorous three-stage mixed-methods framework. Using SARS trade data for over 1,000 components across 30+ component systems, the team constructed an Index of Component Signal Strength (ICSS) through Principal Components Analysis, integrating aftermarket value, export performance, import trends, revealed comparative advantage, and product complexity. This was validated through structured engagements with 25 stakeholders spanning OEMs, component manufacturers, importers, and aftermarket retailers. A Critical Location Factor (CLF) assessment then evaluated each component against demand scale, supplier readiness, technology and skills capability, cost competitiveness, the regulatory environment, and institutional support.
The process narrowed a starting universe of over 1,000 components to a final shortlist of 12, divided into two tiers:
Tier 1 -- High feasibility given current market dynamics: Lead-acid batteries, automotive glass, brake pads, brake discs, brake shoes and drums, and spark plugs.
Tier 2 -- Feasible with additional policy support: Air filters, cabin air filters, oil filters, fuel filters, soft gaskets, and mats and floor coverings.
The study finds that most localisation opportunities are scale-up challenges rather than greenfield investments. South Africa already has established or partial manufacturing capacity in the majority of shortlisted components. The central constraint is not whether production is technically feasible, but whether it can be sustained commercially at competitive unit costs. Import price gaps range from approximately 4% for lead-acid batteries to 94% for soft gaskets -- and the evidence consistently points to enforcement, input-cost reduction, scale, and automation as the most effective pathways to restoring competitiveness, rather than direct price-parity subsidies.
Three components emerge as immediate priorities based on their combined scoring across price-parity support required, aftermarket size, job contributions, and benefit-cost ratio:
Lead-acid batteries (R1.8 billion aftermarket; approximately 2,431 direct, indirect, and induced jobs): Established local manufacturers exist. The import price gap is narrow at around 4%. The binding constraint is input cost -- specifically, scrap battery exports that divert recycled lead feedstock out of the country. Restricting used battery exports and standardising the scrap-deposit levy would materially improve competitiveness without requiring a subsidy.
Automotive glass (R1.4 billion aftermarket; approximately 1,975 jobs): Imported windscreens break at an average rate of 3.2% during shipping, adding approximately 5.7% to effective landed cost. South Africa has a dominant domestic producer (Shatterprufe) already operating near minimum efficient scale. Better enforcement of existing anti-dumping duties and a tiered insurance reimbursement model favouring locally compliant glass would improve furnace utilisation without fiscal cost.
Brake pads (R1 billion aftermarket; approximately 1,297 jobs): Established local manufacturers supply OEM channels, but the independent aftermarket has shifted to imports typically 20--30% cheaper. Sub-standard imported pads using thinner backing plates pose both a competitive and a road safety risk. Mandatory backing plate thickness testing on imported brake pads would level the competitive field on quality.
Recommended areas of action across the full shortlist include:
Improving demand visibility through structured roundtables between OEMs, component manufacturers, and major retailers, aligning commercial expectations on high-runner SKUs, replacement cycles, and volume forecasts.
Strengthening enforcement of standards, anti-dumping duties, and customs classifications -- identified as the highest-impact, lowest-cost lever available across multiple components.
Conducting a skills and infrastructure audit covering toolmaking capacity, engineering capability, and testing infrastructure at Tier 2, Tier 3, and aftermarket firms.
Channelling OEM obligations under NIPP, AITF, and B-BBEE Enterprise and Supplier Development spend toward domestic aftermarket manufacturers with demonstrated scale-up capacity.
Pursuing AfCFTA export development as an explicit objective, with mid-sized African markets -- including Kenya, Nigeria, Ghana, and Uganda -- offering realistic near-term opportunities for lead-acid batteries, automotive glass, and brake pads.
Considering extensions to existing production incentives such as the Manufacturing Support Programme (MSP) to cover aftermarket manufacture more explicitly.
International case studies from Thailand, Russia, Morocco, and Brazil underscore several cross-cutting lessons: long-term and consistent industrial policy is non-negotiable; supplier clustering near OEMs drives scale and technology transfer; domestic market size alone is rarely sufficient without export markets to achieve competitive unit costs; and protection without structural reform does not work, as South Africa's own experience with tyre manufacturing illustrates.
The study establishes that South Africa's automotive aftermarket is both larger and more strategically significant than industrial policy has previously recognised. The 12 shortlisted components represent those where demand, capability, feasibility, and competitiveness signals align sufficiently to warrant prioritised action -- a defensible and evidence-based starting point for meaningful localisation in a sector that matters for employment, import substitution, and the resilience of South Africa's domestic manufacturing base.
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