South Africa Phases Out Support for SKD Vehicle Assembly
Trade Minister Parks Tau announced the phase-out of policy support for semi knocked-down vehicle assembly to drive deeper local production and investment.
Trade, Industry and Competition Minister Parks Tau announced that South Africa will stop providing policy support for automakers using semi knocked-down (SKD) assembly, where near-complete vehicle kits are imported for local assembly. Speaking during South African Auto Week, Tau stated the government will not support new SKD facilities to encourage deeper local production and sourcing.
The policy shift aligns with the South African Automotive Master Plan, which targets increasing local content from 38% to 60% and raising the country's share of global vehicle output to 1% by 2035. While the phase-out excludes medium and heavy commercial vehicles, the government is reviewing the Automotive Production and Development Programme and investigating whether the ladder-frame light commercial vehicle segment requires additional support.
The decision follows pressure from industry leaders at BMW Group South Africa and Toyota South Africa Motors, who argued that SKD operations create a loophole that undermines full-scale manufacturing investments. The government indicated that any future additional protections must be paired with reciprocal commitments regarding employment, investment, and localization.
