A study released at SA Autoweek shows that enforcing existing local content requirements, buying together and targeted incentives can lift local content from about a third of each bus to as much as half
14 October 2026 – Durban: The Localisation Support Fund (LSF) has released the South African Bus Manufacturing Industry Development Study at SA Autoweek in Durban. Prepared by Ernst & Young in collaboration with the National Association of Automobile Manufacturers of South Africa (NAAMSA ), the study finds that South Africa’s bus industry does not need new policy to thrive. However, what it needs is for the rules that already exist to be applied consistently.
The South African transport sector buys around 1 000 new buses a year and has strong local body-building capability, with local content in bus bodies typically between 70 and 90% by value. Yet imports still account for 60 to 70% of the value of a whole bus, mainly chassis, drivetrains and electronics. Annual sales fell from 1 099 in 2017 to 665 in 2021 and recovered to 945 in 2024, still below what the industry’s capacity allows. The sector supports an estimated 40 000 to 50 000 jobs.
The study identifies four causes for this situation, which are fragmented procurement, local content requirements that are applied unevenly across tenders, electric and hybrid buses falling outside those requirements, and fully-built imports entering the market, while local assembly is available.
Using scenario modelling looking ahead up to 2040, the study shows how much policy choices matter. Local content in the whole bus is about 20% on the “low road”, 32 to 35% on the current path, and 40 to 50% on the “high road”. Each 1% increase in local content is predicted to add about R1 billion to GDP and support about 325 full-time jobs.
On the “high road” scenario, the sector’s total annual contribution to GDP, including supplier and household spending effects, is modelled at about R88 billion, compared with R68 billion on the current path and R55 billion on the “low road”. Direct employment in manufacturing and related operations rises to about 12 200 full-time jobs, against about 10 400 on the current path and 8 400 on the low road, with further jobs supported across supplier networks and local services.
“The foundations are already in place: body builders, vehicle makers and local content requirements,” said Irshaad Kathrada, Chief Executive Officer of the LSF. “What has been missing is predictability in procurement and consistent enforcement of the rules we already have. Get that right, and more of the value of every bus South Africa buys can stay at home.”
The study estimates that higher local content comes at a price, adding about R300 000 to the cost of a bus on the “high road” scenario. However, the model shows that this is outweighed by the benefits. Pooling purchases could cut capital costs by 10 to 15%, and fares could fall by 50 cents to R1 a trip. The benefit-cost ratio stays above 1 in every scenario tested, meaning commuter savings alone exceed the fiscal cost of the incentives.
The study makes four mutually reinforcing recommendations:
• Enforce and extend local content requirements: raise the threshold for diesel bus bodies to 85% and bring electric and hybrid bus bodies in over five years, supported by standard tender fields and tighter checks on fully-built imports.
• Buy together: group smaller municipalities into buyer clusters, while large metros continue to procure independently.
• Tailor incentives: extend the Volume Assembly Localisation Allowance to buses, at about 250 units a year, through an adjustment to the Automotive Production Development Programme Phase 2 (APDP2).
• Grow with the region: use the African Continental Free Trade Area (AfCFTA) rules of origin and build regional value chains that bring more of South Africa’s African trading partners into the value pool, so that regional demand adds scale for everyone in the chain.
The study also points to specific components where local capacity already exists or could be deepened, including batteries, wiring harnesses, automotive glass, tyres, seats, fuel tanks and wheel rims.
The findings support the South African Automotive Masterplan 2035, the country’s public procurement framework and the review of APDP2.
“The publication of the LSF Bus Industry Development Study during the fifth edition of SA Auto Week marks an important milestone for South Africa’s automotive industry. It provides a platform for conversation for greater policy certainty, strengthens the foundation for increased local manufacturing and creates a meaningful opportunity to deepen localisation across the bus value chain. As naamsa, we welcome this development and remain committed to working with government, manufacturers and industry partners to translate the proposals into investment, industrial growth, skills development and sustainable jobs,” said Dr Mncane Mthunzi, Chief Executive Officer of naamsa.
The full report is available at lsf-sa.co.za/reports/south-african-bus-manufacturing-industry-development-study.