The South African government has secured investment commitments from Chinese and Indian automotive companies to transform local auto production. The plan: convert existing SKD (semi-knocked down) assembly operations into full CKD (complete knocked down) factories — thereby capturing more value within South Africa.
SA vehicle manufacturing: Trade Minister Parks Tau confirmed that firms like BAIC (China) and Mahindra (India), both already active with SKD operations in South Africa, will take on central roles in this transition.
Their operations in Gqeberha (for BAIC) and Durban (for Mahindra) are set to scale up toward full manufacturing, according to a recent report from Reuters.
This move is designed to reverse decades of deindustrialisation, fortify South Africa’s position in the global auto value chain, and protect domestic jobs threatened by surging vehicle imports. Industry executives have warned that without such intervention, the country risks losing leadership as Africa’s top auto producer to emerging competitors like Morocco.
One of the key industry challenges is that carmakers in South Africa have shifted strongly toward imports (especially from China) over the past years.
Toyota’s CEO recently noted that the share of CKD-manufactured vehicles sold domestically has declined from 56 % to 33 % over 19 years — a stark warning about the erosion of local value creation.
The government’s role, says Tau, will involve providing incentives, removing bottlenecks, and supporting the necessary infrastructure and policy environment to make full assembly viable. This includes supporting parts suppliers, energy provision, logistics, and regulatory clarity.
If successful, the shift could lead to a revival of the auto manufacturing sector, deeper supply chain localisation, and more stable employment in the industry. But execution will need to overcome serious risks — from global EV transition pressures to competition from imports, infrastructure gaps, and regulatory delays.
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FAQs
SKD (semi-knocked-down) means auto parts are partially assembled elsewhere and then finished locally. CKD (complete-knocked-down) means the assembly, and significant parts production, happens locally — capturing more value in the country.
BAIC (China) and Mahindra (India) are leading the commitments, with existing SKD operations in Gqeberha and Durban, respectively.
Key sites include Gqeberha (for BAIC) and Durban (for Mahindra). Existing assembly plants in these areas are the focal points for upgrade.
It should boost employment across manufacturing, assembly, parts supply, logistics, and regional value chains — as more operations localise production rather than relying on imports.
Major risks include execution gaps, regulatory delay, inland infrastructure constraints (power, logistics), strong competition from low-cost imports, and disruptive shifts in global auto demand — especially toward electric vehicles.
