South Africa will announce measures to increase domestic auto manufacturing
The government announced Tuesday that South Africa will introduce measures to increase domestic auto production by the end of February, including a review of import duties and luxury taxes on imported vehicles.
To tackle issues including the global transition to electric and hybrid cars, stricter pollution regulations, changing trade dynamics, and more competition from low-cost imports from China and India, the government is reevaluating its automotive strategy.
This year, Morocco overtook South Africa as the continent’s top automobile manufacturer.
Alongside addressing concerns about local production, Mkhululi Mlota, Chief Director of Automotives at the Department of Trade, Industry, and Competition, informed lawmakers that his department was undertaking a thorough review of auto policies, which he said has been a slow process. “We’re looking specifically at how we can turn the tide on localization,” he said. The industry and other stakeholders have made a number of suggestions on how we may accomplish that,” Mlota stated. “We should have a final proposal before the end of February.”
Modifications to taxes and tariffs?
Tax adjustments that might encourage the production of vehicles locally are being considered by authorities. Deputy Minister of Trade, Industry, and Competition Zuko Godlimpi told MPs that these include reevaluating raising tariffs on imported cars and altering the ad valorem tax, sometimes known as the luxury tax.
He stated that talks with the National Treasury will shortly begin.
As part of its 2018 automotive master plan, South Africa aimed to raise local content in assembled cars from less than 40% to 60% and boost local vehicle production to 1% of global output, or roughly 1.4 million units. 2025 saw an increase in local production reaching 602,302.
Light cars accounted for 69.3% of national sales in 2025, indicating an influx of reasonably priced models, particularly from China and India, but the number of imported vehicles is still rising.
The government is in discussions with Chinese automakers about expanding production in South Africa, according to Godlimpi. Last Friday, Nissan said that it has sold its South African manufacturing assets to Chery Automobile, a local subsidiary of China.
