South Africa plans to gradually withdraw policy support from automakers that assemble vehicles locally from semi-knocked-down (SKD) kits. Trade Minister Parks Tau announced the change at South African Auto Week in Durban as the government reviews the incentives and rules shaping the automotive industry.
SKD operations bring in vehicle bodies and many components in partly assembled form, requiring less local production than manufacturing a vehicle from the ground up. The government says it will stop supporting new SKD facilities and phase out existing operations. Medium and heavy commercial vehicles are excluded from this change.
Government wants more manufacturing to happen locally
The shift is part of a review of the Automotive Production Development Programme, involving the government, automotive industry bodies and organised labour. Tau said the department would also clarify the definition of complete-knocked-down (CKD) manufacturing, where more of the vehicle assembly and component work takes place locally.
South Africa’s Automotive Master Plan targets raising local content from an average of 38% to 60% by 2035. It also aims to double employment in the sector and lift the country’s share of global vehicle production to 1%.
Automakers have argued that the current framework should do more to reward deeper local production. BMW South Africa’s chief executive and Toyota South Africa Motors’ chief executive have both called for SKD assembly to be phased out, Reuters reported.
Pickup and van sector under review
The government will separately examine the competitiveness of the ladder-frame light commercial vehicle market, which includes pickups and some vans. Tau said the segment warranted a formal investigation. No final measures or timetable for that review have been announced.
