- Chinese and Indian automakers commit to full-scale vehicle manufacturing in South Africa
- Authorities will help companies reach full production and boost the industrial base
- Initiative aims to reverse declining CKD sales and strengthen South Africa’s auto sector
Recently, Trade Minister Parks Tau stated that South Africa has obtained assurances from Chinese and Indian vehicle manufacturers to transition their semi-knocked-down (SKD) assembly operations to complete manufacturing.
The development comes at a time when government and industry leaders are working to reinforce domestic production against the backdrop of declining output, increasing competition from Chinese imports, tariff uncertainty and the expensive adjustment to electric vehicles.
South Africa auto manufacturing is set to expand with significant China India investment South Africa, supporting modernization and capacity upgrades.
The government is in continual discussions with multi-national car manufacturers and their suppliers with South African operations, including Ford and Toyota, on the durability of the local automotive industry.
This boost aims to strengthen the South Africa automobile sector, drive South Africa auto industry growth, and attract further foreign investment auto opportunities.
Industry leaders have warned that without protective measures against imports; the country could be de-industrialized. At the annual auto conference, Tau indicated that producers of SKD plants in South Africa have provided assurances that they will transition to complete knocked-down (CKD) assembly which involves building vehicles from parts delivered to the plant, versus SKD operations which use partially assembled kits that are completed locally.
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Beijing Auto Industrial Corporation (BAIC) a Chinese automaker, operates in Gqeberha an SKD assembly for its Beijing X55 crossover along with Isuzu and Volkswagen. They intend to shift from SKD to CKD.
Mahindra from India has also been assembling semi-knocked down pick-up trucks in Durban. Previously, in 2021, Mahindra partnered with the Industrial Development Corporation to assess the viability of completely localizing the manufacture of pick-up trucks in South Africa.
Minister Tau stated that the government would provide support in those transitions, which could enhance South Africa's industrial base, and pivot South Africa as a manufacturing hub for Africa.
He also mentioned that they had been engaged in discussions with other prospective investors in China and India, and these conversations have generated interest in collaboration with existing manufacturers or building new factories in South Africa.
In the last 19 years, the proportion of CKD vehicles sold in South Africa has decreased from 56% to 33% in August, necessitating the need for revitalized local production.