South Africa has secured commitments from Chinese and Indian automakers to upgrade their semi-knocked-down (SKD) vehicle assembly operations to full-scale manufacturing, Trade Minister Parks Tau said on Thursday, as industry leaders press for stronger domestic production.
The government is holding talks with multinational carmakers with factories in South Africa, including Toyota and Ford and their suppliers, on measures to protect the industry as it faces shrinking production volumes, rising competition from China, tariff uncertainty, and the costly transition to electric vehicles.
At an annual auto conference on Wednesday, auto executives warned that unless the country shields its industry from imports, it risks accelerating de-industrialization, Reuters reported.
Speaking after engagements with industry players in China and India, Tau told delegates that “in both those markets, the companies that currently have SKD operations in South Africa have committed to transition to CKD (complete knocked down).” SKD involves assembling vehicles from partially built kits, while CKD refers to full-scale assembly from individual parts.
Chinese automaker Beijing Auto Industrial Corporation (BAIC) currently assembles its Beijing X55 crossover through SKD operations in Gqeberha, a port city that also hosts Isuzu and Volkswagen plants. The facility is designed to shift into CKD production.
Don’t Miss This:
US Puts Brazil, South Africa On Human Trafficking Watch List
India’s Mahindra assembles semi-knocked-down pickup trucks in Durban and earlier this year partnered with the Industrial Development Corporation to launch a feasibility study on establishing a full-scale manufacturing plant in the country.
Tau emphasized that the government’s role would be to support these companies in moving to full manufacturing capacity, strengthening South Africa’s industrial base while positioning the country as a continental hub.
He added that discussions with additional investors in China and India had sparked interest in either partnering with existing automakers to utilize excess capacity or in building new factories in South Africa.
The share of CKD vehicles sold locally has fallen sharply, dropping from 56 percent nineteen years ago to 33 percent in August, according to Toyota South Africa CEO Andrew Kirby. “What this means is that we are flooding the market with imports,” he said. “Sustaining CKD volumes is critical to preserving the domestic auto industry, local value creation and economic benefits.”
South Africa has been the continent’s leading vehicle producer for a century, but its dominance is under threat. “We are facing the risk of losing this position as the top dog on the continent (to Morocco) as early as this year,” said Neale Hill, president of Ford Africa.
Don’t Miss This:
South Africa’s New Vehicle Sales Set To Surpass Pre-Pandemic Levels In 2025
Image Credit: CNBC AFRICA
