South Africa is contemplating imposing substantial tariffs, potentially up to 50%, on vehicle imports originating from China and India. This move is aimed at providing a buffer for its domestic automotive industry against a surge of competitively priced imports. The Department of Trade, Industry and Competition (dtic) is currently undertaking an internal review to assess measures designed to curb the inflow of vehicle shipments. Policymakers have expressed concerns that these imports are exerting pressure on local manufacturing operations and employment opportunities.
China and India have emerged as the world's two largest vehicle manufacturing hubs, collectively accounting for a considerable proportion of South Africa's vehicle imports in the past year. Industry data indicates that vehicles sourced from China constituted 53% of total imports in 2024, while India accounted for an additional 22%. This influx has been particularly noticeable in the entry-level vehicle segment, where the competitively priced imports have intensified competition and squeezed profit margins for domestic producers.
South Africa has historically relied on its automotive sector as a crucial driver of industrial output and exports, with several major global carmakers operating manufacturing plants within the country. As part of the ongoing review, the dtic is expected to consult with the National Treasury regarding potential tax-related interventions. These interventions could involve the introduction of an excise duty on new luxury vehicles and adjustments to the operation of rebate credit certificates, which currently support local production under South Africa's automotive incentive framework.
Zuko Godlimpi, the Deputy Minister of Trade, Industry and Competition, stated that the government would utilize duties to safeguard its manufacturing sector. He also noted that South Africa was actively working to persuade Chinese car manufacturers to establish manufacturing operations in the country, with the goal of expanding the country's current tally of seven assembly plants.
Ayabonga Cawe, commissioner of the country's International Trade Administration Commission, indicated that South Africa possesses "room to maneuver" within its concessions to the World Trade Organization (WTO). For completely built-up (CBU) imported passenger vehicles, South Africa's bound rates are at 50%, while the current duties imposed under the government's Automotive Production and Development Programme (APDP) are approximately 25%.
The potential imposition of tariffs occurs despite the fact that China, India, and South Africa are all members of the BRICS grouping of emerging economies, which aims to foster closer trade and investment relationships among member states. Analysts suggest that any decision to raise tariffs would require a careful balancing act, weighing the protection of domestic industry against the potential for higher vehicle prices for consumers and possible trade tensions with key trading partners.
The South African government is expected to present measures by the end of February to boost local vehicle production, including reviews of luxury taxes on imported cars and import tariffs. 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 to address concerns raised on local production.
