South Africa to Phase Out Imported Vehicle Kits to Boost Local Manufacturing

South Africa is pulling the plug on tax-efficient assembly. Trade, Industry and Competition Minister Parks Tau announced on Thursday at SA Auto Week in Durban that the government will phase out policy support for semi-knock-down vehicle operations, directing automakers toward deeper local production and sourcing.

Phasing Out Kit Assembly for Full Production

The policy shift targets semi-knock-down (SKD) assembly, a method that imports near-complete vehicle kits primarily for tax efficiency while producing fewer local jobs. Existing SKD operations will be phased out and new facilities will be denied policy backing, though medium and heavy commercial vehicles are exempt.

Government officials will tighten legal definitions surrounding complete-knock-down (CKD) manufacturing. The broader strategy, outlined in the South African Automotive Master Plan, targets raising local content to 60% by 2035 from the current average of 38%.

Automakers Urge Pretoria to Boost Domestic Manufacturing

Automakers have long urged Pretoria to adjust policies in favor of deeper manufacturing activity. Toyota South Africa Motors CEO Andrew Kirby warned in July that assembling vehicles from kits risks undermining larger investments in full-scale production. Local producers want a better balance between locally produced vehicles and imported vehicles, according to CNBC Africa.

The ambitious master plan also seeks to double employment within the sector and increase South Africa’s share of global vehicle output to 1% by 2035.

Authorities Investigate Support for Light Commercial Vehicles

Authorities are turning their attention to light utility vehicles. Tau stated he would instruct the International Trade Administration Commission to investigate whether the ladder-frame light commercial vehicle segment, which includes vans and pickup trucks, requires additional support. Mahindra & Mahindra currently operates a semi-knock-down pick-up truck facility near Pretoria.

Beyond assembly lines, transformation remains a core structural requirement for industrial competitiveness. Tau emphasized that empowerment must extend to black industrialists, workers, engineers, managers, and owners. Under current APDP2 regulations, qualifying entities eligible for production incentives must be BBBEE compliant or contribute directly to the Automotive Industry Transformation Fund.

Training Initiatives Support Transition to Electric Vehicles

The industrial shift is happening alongside rapid technological change. Louis van Huyssteen, National Training Director for the Retail Motor Industry Organisation, noted during SA Auto Week that conventional vehicles will require servicing alongside growing volumes of new energy vehicles. MerSETA-funded training initiatives have registered 1,316 learners across short skills, artisan programmes, and recognition of prior learning.

That transition met the pavement as the third annual New Energy Vehicle Road Trip rolled into Durban, featuring twelve battery electric vehicle models arriving at Moses Mabhida Stadium. Chinese brands such as BYD, GWM, Geely, and Deepal continue expanding their footprint across local segments, while GridCars data indicates South Africa has over 544 charging sites across its national roads.

Unresolved Questions for Regulators and Manufacturers

The primary question remains how the International Trade Administration Commission will ultimately determine support for the pickup truck segment, and how quickly existing assembly lines will adapt to the stricter manufacturing definitions.

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