The South African automotive landscape is at a crossroads as the Department of Trade, Industry, and Competition (DTIC) considers doubling vehicle import duties from 25% to 50%. While intended to curb the influx of affordable models from China and India and protect local manufacturing, industry titans, led by Volkswagen Group South Africa (VWSA) and BMW, are warning that such a move could backfire, hurting consumers and local factories alike.
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Speaking at Volkswagen’s annual Indaba, VWSA Managing Director Martina Biene argued that the industry is being “choked” by a lack of government reform rather than foreign competition. Biene emphasized that the slow finalization of New Energy Vehicle (NEV) policies and stagnant ad valorem tax structures have created a climate of uncertainty.
This is particularly critical for VWSA’s Kariega plant. While the plant currently enjoys success with the Polo and Vivo lines, its primary export markets in Europe and the UK are rapidly transitioning to electric vehicles. Without clear local NEV incentives—aside from a tax refund not effective until March 2026—securing future investments, such as the production of the planned Tarok half-tonne bakkie, remains a challenge.
Biene and other executives highlighted a significant loophole in the current system: the tax benefits granted to semi-knockdown (SKD) operations. These facilities import nearly duty-free components and assemble cars with minimal local impact. In contrast, completely knocked-down (CKD) plants like Kariega create eight jobs for every one job generated by an SKD facility. The industry is calling for adjustments to the Automotive Production and Development Programme (APDP) to reward deep-rooted manufacturing over simple assembly.
BMW South Africa CEO Peter van Binsbergen characterized the proposed 50% tariff as a “blunt instrument.” He noted that:
- Entry-Level Impact: Models from China and India currently represent 23 of the 25 most affordable cars in SA. Massive duties would make mobility inaccessible for thousands.
- Incentive Depletion: Manufacturers with local plants still rely on imports for a portion of their fleet. Higher duties would drain the “offsetting mechanisms” they use to keep local prices stable.
The Motor Industry Staff Association (MISA) echoed these concerns, noting that the “flood” of imports actually stimulated the market in 2025, leading to three consecutive months of record-breaking sales. Raising tariffs, they argue, could reverse the first meaningful growth the sector has seen in a decade.
