South Africa will unveil measures by the end of February aimed at increasing local vehicle production, including reviews of luxury taxes on imported cars and import tariffs, the government said on Tuesday, according to Reuters.
The government is reassessing its automotive policy to tackle challenges such as the global shift to electric and hybrid vehicles, stricter emissions standards, changing trade dynamics, and growing competition from low-cost Chinese and Indian imports.
Earlier this year, South Africa lost its long-standing position as Africa’s largest vehicle producer to Morocco.
Mkhululi Mlota, Chief Director of Automotives at the Department of Trade, Industry and Competition, told lawmakers that his department is conducting a comprehensive auto policy review.
He acknowledged that the process has been slow but said it is happening alongside efforts to address concerns about local production.
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“We’re looking specifically at how we can turn the tide on localisation. There are a number of proposals that have come from industry and other players on how we can do that,” Mlota said. “We should have a final proposal before the end of February.”
Officials are also considering tax reforms designed to favor local vehicle production.
These include potential changes to the ad valorem tax, or luxury tax, as well as a reassessment of tariffs on imported vehicles, Deputy Minister of Trade, Industry and Competition Zuko Godlimpi told lawmakers. He added that discussions with the National Treasury will begin soon.
South Africa’s 2018 automotive master plan aimed to raise local vehicle production to 1% of global output, roughly 1.4 million units, and increase local content in South African-assembled cars to 60% from below 40%.
By 2025, local production had reached 602,302 units. However, imports continue to rise, with light vehicles making up 69.3% of national sales in 2025, reflecting a surge in affordable imports, particularly from India and China.
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Image Credit: Engineering News
