Volkswagen has warned that its Kariega vehicle manufacturing plant in South Africa’s Eastern Cape may be forced to close unless the government delivers urgent policy reforms, placing more than 4,000 direct jobs and tens of thousands more across the supply chain in jeopardy.
The German automaker, which has operated in South Africa for decades, said ongoing uncertainty around the country’s New Energy Vehicle (NEV) policy and inadequate government support are undermining the facility’s global competitiveness.
Since 2011, Volkswagen has invested more than $538 million in the Kariega plant, including a $210 million commitment in 2024 to prepare for production of a new SUV model scheduled for 2027. Despite those investments, the company says engagement with the Department of Trade, Industry and Competition (DTIC) has failed to yield meaningful progress.
“Words without action are not leadership — they are negligence,” said Martina Biene, Chairwoman of Volkswagen Group Africa. “2026 will be a make-or-break year for Volkswagen in South Africa.”
The warning comes amid mounting headwinds for the country’s automotive sector. In recent months, cheap Chinese imports, rising tariffs, and weakening consumer demand have squeezed local manufacturers. Nissan’s Rosslyn plant was acquired by Chery earlier this year, ending local production of the Navara pickup and adding to industry unease.
Labour unions have reacted with alarm. Irvin Jim, General Secretary of the National Union of Metalworkers of South Africa (Numsa), accused the government of failing to respond with urgency.
“We need a decisive and coordinated state response,” Jim said. “We are openly being raided, and there is no sense of urgency.”
Volkswagen has also criticised South Africa’s NEV policy framework as too narrow, arguing that its exclusive focus on battery electric vehicles ignores more immediately viable transitional technologies such as hybrids.
“The NEV policy is too narrowly focused on battery electric vehicles that are largely unaffordable locally,” Biene said. She warned that without a more pragmatic approach, South Africa risks being left behind as markets like Europe accelerate their shift to electrification.
Rising EU carbon penalties and shrinking export competitiveness are adding to the pressure. Analysts warn that the potential loss of Volkswagen’s Kariega plant would deal a severe blow to an already fragile industrial base.
“It is time to stop the proverbial presses and focus all our attention on this pending disaster,” said Boshoff, an industry observer.
The fate of the plant — and the thousands of workers who depend on it — now hinges on whether policymakers in Pretoria can deliver the reforms Volkswagen says are essential to keep the doors open.
