An assessment of the South African automotive industry towards sustainable economic growth: A pre-COVID-19 analysis

South Africa’s automotive industry, the largest in Africa, experienced subdued economic growth, declining vehicle sales, and rising fuel prices before the COVID-19 pandemic. Considering its crucial role in fostering industrialisation and boosting economic growth, this paper aimed to analyse the automotive industry and its impact on economic growth in South Africa between 1995Q1 and 2020Q1. The long- and short-term results, using the autoregressive distributed lag model, confirm that the performance of domestic car sales, exchange rate, vehicle exports, the unemployment rate, and fuel prices all affect the country’s growth and validate evidence of causality, where a reciprocal causal link between the automotive industry and economic growth is observed. Therefore, policymakers should allocate more resources to the automotive industry, such as investment in smart mobility and infrastructure, and increased support via customised inflation-adjusted export programmes, virtual showrooms, digital sales, targeted exhibitions and currency diversification programmes to drive economic growth.