South Africa will present measures by the end of February to boost local vehicle production, including reviews of luxury taxes on imported cars and import tariffs, the government said on Tuesday, 27 January.
File photo: A worker speaks on the phone in front of some of the BYD models at a dealership in Sandton, South Africa, 5 June 5 2025. Reuters/Siphiwe Sibeko/File Photo
The government is reviewing its automotive policy to address challenges, including the global shift to electric and hybrid vehicles, tighter emissions standards, evolving trade dynamics and rising competition from low-cost Chinese and Indian imports.
South Africa lost its long‑held position as Africa’s largest vehicle producer to Morocco this year.
Mkhululi Mlota, chief director of Automotives at the Department of Trade, Industry and Competition, told lawmakers his department was conducting a comprehensive auto policy review, which he said has been a slow process, in parallel with addressing concerns raised on local production.
“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.”
Changes to taxes and tariffs?
Officials are considering tax reforms that would favour local vehicle production. They include changes to the ad valorem tax, or luxury tax, and reassessing hiking tariffs on imported vehicles, deputy minister of Trade, Industry and Competition Zuko Godlimpi told lawmakers.
He said engagements with the National Treasury will commence soon.
South Africa’s 2018 automotive master plan set a goal of lifting local vehicle production to 1% of global output – about 1.4 million units – and to increase local content in South African assembled cars to 60% from below 40%. In 2025, local production rose to 602,302 units.
However, imported vehicles continue to rise, with light vehicles accounting for 69.3% of national sales in 2025, reflecting an influx of affordable model imports, especially from India and China.
Godlimpi said the government is talking to Chinese car manufacturers about setting up more manufacturing in South Africa. Last Friday, Nissan announced the sale of its manufacturing assets in South Africa to the local arm of China’s Chery Automobile.
