South Africa will stop giving policy support to carmakers that import almost complete vehicles and only put them together here, trade, industry and competition minister Parks Tau said on Thursday.
Tau was speaking at South African Auto Week. He said the government had agreed to phase out current plants that build cars from imported kits. New plants of this kind will not get policy support.
This type of work is called semi-knocked-down (SKD) assembly. The car bodies and most of the parts arrive from overseas in kit form, and the final assembly is done locally.
The government said the change aims to push carmakers to build more of each vehicle in South Africa and to buy more parts locally. The South African Automotive Master Plan wants local content to rise to 60% by 2035. The current average is 38%.
The plan also aims to double jobs in the car sector by 2035. It wants South Africa to make 1% of all vehicles built in the world by then.
Tau said the new rule will not cover medium and heavy commercial vehicles. He said officials will also tighten the legal meaning of completely knocked-down (CKD) manufacturing. In CKD work, vehicles are built locally from single parts instead of near-complete kits.
The minister said the government will look at whether bakkies and other ladder-frame light commercial vehicles need more support. He said he will ask the International Trade Administration Commission (Itac), which sets import tariffs, to investigate first.
“There was also alignment that any additional protection should be accompanied by reciprocal commitments relating to production, localisation, employment, transformation, exports and investment,” Tau said.
The government is reviewing the Automotive Production and Development Programme, which sets the incentives for the car industry. It is doing this with industry body Naamsa, parts makers’ group Naacam and organised labour.
Carmakers had asked for changes that favour full local manufacturing and protect local factories from imports. Earlier this year, BMW Group South Africa CEO Peter van Binsbergen said the industry had urged the government to close what he called 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.
In July, Toyota South Africa Motors CEO Andrew Kirby said the local car sector no longer needed SKD plants. He warned that building cars from kits could hurt bigger investments in full 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.
Source: this article is based on reporting by TechCentral. Image: TechCentral. Written with the help of AI and published by the Tzaneen Voice Technology desk. See our Editorial Standards.
Werner Jacobs covers technology for Tzaneen Voice. Werner reports on mobile networks, data prices, internet access, smartphones, apps, AI, cybersecurity and South African tech companies. Each story explains what a new product, price change or policy means for ordinary users in South Africa.