South Africa is weighing fresh incentives for its automotive sector in response to the financial strain posed by steep U.S. import tariffs on vehicles, Trade and Industry Minister Parks Tau said on Thursday.
The move is aimed at softening the blow from a 25% tariff imposed by the U.S. on car imports, a policy introduced under the administration of former President Donald Trump. The tariff, which affects a significant portion of South Africa’s car exports, has raised concerns within the industry over shrinking margins and reduced competitiveness in one of its key markets.
“We’re looking into expanding the current automotive industry production plan to help absorb the pressure on our sector,” Tau said during an interview on Power FM. “Our teams are modeling what that support could look like, not just for the automotive industry but for other vulnerable sectors as well, within the limits of what the country can afford.”
South Africa’s Automotive Production and Development Programme (APDP) currently provides incentives based on production volumes, alongside customs duty rebates and other support mechanisms. The programme has played a vital role in encouraging investment and employment in the sector.
The National Association of Automobile Manufacturers of South Africa (NAAMSA) has raised alarms about the tariff’s ripple effects. The group warned that the additional cost cannot be absorbed by local manufacturers and will likely translate into higher prices for American consumers and a shrinking presence of South African-made vehicles in the U.S. market.
The U.S. ranks as South Africa’s third-largest automotive export market, with around R35 billion ($1.8 billion) worth of vehicles shipped in 2024 alone—representing 6.5% of the country’s total vehicle exports.
Global manufacturers with production hubs in South Africa—including BMW, Ford, Isuzu, Mercedes-Benz, Nissan, and Toyota—face serious disruptions, NAAMSA added, as they rely heavily on U.S. demand to sustain their export volumes.
