South Africa considering auto industry incentives as tariff buffer

File photo: A worker inspects cars at a port, in East London, in the Eastern Cape province, South Africa on 7 July 2022. Reuters/Siphiwe Sibeko/File Photo

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

"We're currently modelling 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 Automotive Production and Development Programme is an incentive programme that helps drive investment, innovation and job creation in the automotive industry. It offers various rebates and refunds on customs duties, and manufacturers also receive incentives based on their production volumes.

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The National Association of Automobile Manufacturers of South Africa has expressed concern over the 25% US import tariff on cars, saying that it cannot be absorbed by manufacturers, which will result in additional costs for US consumers and a reduced choice of South African-produced brands.

The US is the third-largest destination for South African automotive exports, with approximately R35bn ($1.8bn) worth of vehicles shipped in 2024, accounting for 6.5% of total vehicle exports in 2024.

South African-based manufacturing plants operated by BMW, Ford, Isuzu, Mercedes-Benz, Nissan and Toyota - which produce vehicles for global markets, including the US - will be severely impacted, Naamsa added.