18/10/2026
Trade, Industry and Competition Minister Parks Tau has announced the phasing out of semi-knocked-down (SKD) vehicle assembly and the withdrawal of policy support for new entrants.
Government is attempting to correct a competitive distortion its own policies permitted, with damaging consequences for SA's automotive manufacturing supply chain.
Reduced domestic component production weakens supplier volumes, increases unit costs and discourages investment in tooling, machinery and technical skills. As suppliers lose scale, their ability to compete for future contracts deteriorates, making these capabilities increasingly expensive to rebuild.
Yet Tau's announcement contains a glaring omission: implementation.
There are no published deadlines for terminating SKD arrangements, binding sunset provisions, transition requirements or specified consequences for non-compliance.
These gaps leave room for lobbying, exemptions and negotiated extensions. Government could spend years managing resistance to a decision that demands enforceable obligations.
The proposed tightening of completely knocked-down (CKD) definitions raises another concern. If substantial imported content qualifies for manufacturing incentives, how will genuine domestic value addition be measured and enforced?
Changing classifications without stronger compliance risks reproducing the same distortion under another designation.
SKD operators could switch to importing fully built vehicles rather than investing in CKD production. Withdrawing incentives alone will not deliver deeper localisation.
Established manufacturers must face equivalent scrutiny. Additional protection should require measurable commitments to localisation, supplier development, employment and exports.
The danger is that the same interests and policy compromises that created this distortion will determine how, when and whether it is corrected.
With local government elections approaching and no binding commitments in sight, the possibility that this announcement amounts to political pandering deserves serious consideration.
