Omanghana
South Africa plans to phase out support for semi-knocked-down vehicle assembly as the government pushes automakers to expand domestic production and use more locally manufactured components.
Trade, Industry and Competition Minister Parks Tau announced the policy direction at SA Auto Week in Durban on Thursday, October 15. He said new semi-knocked-down facilities would no longer receive policy support, while existing operations would be phased out. Medium and heavy commercial vehicles will be exempt from the changes.
Semi-knocked-down assembly, commonly known as SKD, involves importing largely pre-assembled vehicle bodies and components for limited finishing work locally. The government wants manufacturers to undertake more extensive production activities that create greater opportunities for South African suppliers and workers.
The shift supports the South African Automotive Master Plan’s targets for 2035. These include increasing local content from an average of 38% to 60%, doubling industry employment and raising the country’s contribution to global vehicle production to 1%.
Authorities also intend to strengthen the legal definition of completely knocked-down manufacturing, or CKD, as part of a review of the Automotive Production and Development Program. The government is conducting that review with automotive industry body naamsa, component manufacturers’ association NAACAM and organised labor.
The announcement follows criticism from established manufacturers about the treatment of imported vehicle kits. BMW Group South Africa chief executive Peter van Binsbergen previously argued that some SKD operators benefited from favorable import classifications while contributing little investment or employment. Toyota South Africa Motors chief executive Andrew Kirby also called for SKD operations to be phased out, arguing that they could undermine investment in fuller manufacturing operations.
Tau further announced plans for the International Trade Administration Commission to investigate the competitiveness of South Africa’s ladder-frame light commercial vehicle segment, which includes pickup trucks.
Any additional protection for that segment would require commitments from manufacturers covering production, local sourcing, employment, transformation, exports and investment. A final decision on further support would follow the investigation.
The government has not yet announced a timetable for phasing out existing SKD operations, leaving manufacturers awaiting details on how the transition will be implemented.
Source: Omanghana
