South Africa weighs auto industry incentives

CAPE TOWN: South Africa is considering offering additional incentives to boost car production, as it weighs measures to offset the impact of US President Donald Trump's trade war, said Trade, Industry and Competition Minister Parks Tau.

"What we're currently considering is the possibility of expanding the automotive industry production plan so that we're able to mitigate impact on our industry," Tau said in an interview with Johannesburg-based broadcaster Power FM.

"We're currently modeling what the potential package could be for the auto sector, but also for other sectors, so that we can do it within the means of the country to buffer the impact."

The Trump administration last month announced a 25% tariff on vehicles produced outside the US, threatening manufacturers that operate in South Africa including BMW AG, Ford Motor Co. and Toyota Motor Corp.

While Trump on Wednesday announced a pause to his plan to increase reciprocal tariffs, he left in place the levy on vehicles.

The US is the third-largest destination for South African automotive exports, with 25,553 vehicles shipped in 2024, accounting for 6.5% of total auto shipments, according to the Pretoria-based Automotive Business Council.

South Africa exported 207.3 billion rand ($10.6 billion) worth of vehicles in 2023, ABC data shows.

South Africa's so-called Auto-Incentive Scheme offers benefits including a non-taxable cash grant of 20% of the value of qualifying investments in productive assets by original equipment manufacturers, and 25% of the value of qualifying investments in productive assets by component manufactures and tooling companies, according to the DTIC's website.