Government weighs lifeline for one of South Africa’s largest employers

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

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

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 R207.3 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.