“A Blunt Instrument”: SA Auto Industry Warns Against Doubling Import Tariffs

A proposed plan to double South Africa’s import duty on carsfrom 25% to the maximum allowable 50%is sending shockwaves through the local motor industry. Senior executives and economists are warning that such a move, intended to protect domestic manufacturing, would backfire spectacularly, hammering consumer affordability and even hurting the local plants it aims to shield.

The warning comes from prominent voices like BMW South Africa CEO Peter van Binsbergen, who cautions against using tariffs as a “big hammer.” The proposal is under internal review by the Department of Trade, Industry and Competition (dtic), aimed at curbing a surge of imported vehicles, particularly from China and India.

A Direct Hit to the Consumer’s Pocket

The maths is stark. According to Theuns du Buisson, an economic researcher at the Solidarity Research Institute, hiking the tariff to 50% could push the price of an entry-level vehicle from around R180,000 to approximately R225,000a jump of over R45,000. Worse, this could catapult some models into the luxury tax bracket, layering on even more cost.

“Affordability is already a major challenge for consumers,” Van Binsbergen stressed. “A 50% maximum tariff would make all imported cars radically more expensive.”

The Unintended Consequence: Hurting Local Manufacturers

The irony, experts point out, is that the policy could wound the very industry it seeks to protect. Many so-called “local manufacturers” actually import most of their model ranges. BMW SA, for instance, only produces the X3 locally; the rest of its lineup arrives as imports.

“If you went up to 50% duties, I would have to use double the incentives to import my cars and probably run out of offsetting mechanisms,” explained Van Binsbergen. “That is the unintended consequence; it would affect all of us.”

Du Buisson echoed this, noting that the cheapest locally manufactured car is already about R100,000 more expensive than the most affordable imports. They aren’t competing in the same segment. Instead, a blanket tariff hike risks creating a perception that all cars are unaffordable, depressing the entire market.

A Call for Nuance, Not a Blunt Force Tool

The industry’s plea is for a surgical approach, not a blanket bomb. Van Binsbergen emphasised that local manufacturers do not support a maximum tariff as a primary tool. The focus, they argue, should be on addressing the root causes that make local production challenging: high electricity costs, failing logistics infrastructure, and complex tax burdens.

Solidarity suggests alternative measures, such as encouraging manufacturers who already do semi-knocked-down assembly to move to full production. However, Du Buisson acknowledges this isn’t a silver bullet. “Manufacturers already complain that the local motor market is too small. Either cars must become cheaper, or people must become wealthier.”

The message from the boardroom to the government is clear: before swinging the tariff hammer, consider the collateral damage. In a country where vehicle ownership is already a steep climb, making cars tens of thousands of rand more expensive isn’t a strategy for growthit’s a guarantee of pain for consumers and the industry alike. The government now faces a critical choice: protectionism that might protect no one, or a more nuanced strategy to truly revitalise local manufacturing.

{Source: BusinessTech}

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