South Africa will stop providing policy support for automakers that import near-complete vehicles for local assembly, Trade, Industry and Competition Minister Parks Tau said on Thursday, as the government overhauls the programme that underpins the country’s car industry.
Speaking at South African Auto Week, Tau said the government had agreed to phase out existing operations that rely on importing vehicle bodies and most of their components in kit form — a process known as semi knocked-down, or SKD, assembly — and would not provide policy support for new facilities.
The shift is designed to push manufacturers toward deeper local production and sourcing. The South African Automotive Master Plan aims to raise local content to 60% from the current average of 38%, double employment in the sector and increase South Africa’s share of global vehicle output to 1% by 2035.
The change will not apply to medium and heavy commercial vehicles, Tau said. Authorities will also tighten the legal definition of what qualifies as complete knock-down, or CKD, manufacturing — in which a vehicle is built from the ground up using locally sourced parts.
Tau also said the government would investigate whether additional support was needed for South Africa’s “ladder-frame” light commercial vehicle segment, which includes pickup trucks. The minister said he would instruct the country’s International Trade Administration Commission (ITAC), which imposes import tariffs, to conduct an investigation before making a final determination on the matter.
“There was also alignment that any additional protection should be accompanied by reciprocal commitments relating to production, localisation, employment, transformation, exports, and investment,” he added.
The government is reviewing the Automotive Production and Development Programme, the incentive framework for the sector, together with industry body NAAMSA, component manufacturers’ association NAACAM and organised labour.
The review follows calls from automakers for incentive and policy changes that would favour deeper manufacturing activity and protect local producers from imports. Earlier this year, BMW Group South Africa CEO Peter van Binsbergen said the industry had urged the government to close what he described as an SKD “loophole.”
“SKD manufacturers are coming in close to duty-free because they’re using aftermarket categories to import the engine duty-free, for example, and they’re actually having a very easy time here in South Africa without creating any investments and hardly creating any jobs,” van Binsbergen said.
Toyota South Africa Motors CEO Andrew Kirby said in July that the country’s automotive sector had evolved beyond the need for SKD operations and warned that assembling vehicles from kits risked undermining larger investments in full-scale production.
“So our strong request is that we phase out SKD in South Africa and that we strengthen the competitiveness of CKD, so that we can have a better balance between locally produced vehicles and imported vehicles,” Kirby said.
