Light vehicle assembly plants must transition to full-scale manufacturing or cease operations in South Africa, says Toyota SA Motors (TSAM) CEO Andrew Kirby, amid concerns the sector is being undermined — jeopardising employment and scuppering economic growth.
Kirby, who serves as vice-president of manufacturing OEMs at automotive business council Naamsa, was responding to questions about closing the semi-knocked-down (SKD) production loophole, an issue voiced by counterparts from BMW and Volkswagen at recent briefings.
“Investments in light vehicle completely knocked-down [CKD] vehicle production — the deep level of manufacturing processes including welding, painting and assembly — shouldn’t be placed at risk by light-touch assembly production [SKD] operations,” he said.
“We are also concerned that more SKD operations could start up in South Africa, further undermining the existing production plants, directly reducing the significant economic contribution and the jobs that are provided by the light vehicle CKD operations.”
According to Kirby, for every job created in a light vehicle SKD facility, as many as eight jobs were lost by the corresponding CKD operations. He called on the department of trade, industry & competition (DTIC) to develop a timeframe for the current light vehicle SKD operations to transition to CKD production or close shop.
Brands with light vehicle SKD operations include India’s Mahindra in Durban and Chinese marque BAIC in Gqeberha. Neither company responded immediately to questions from Business Times.
A potential investment is not simply about acquiring an existing facility; it must be supported by a sustainable long-term plan, including upgrading processes, transferring new skills, and ensuring workforce alignment within the current labour framework
— Steve Chang, MD of BYD South Africa
However, Foton, which shares the BAIC facility, announced in January that CKD manufacturing of the Foton Tunland bakkie had begun. Spokesperson Taryn Jakobi said the Foton plant has an annual capacity of 50,000 units, supporting 150 local suppliers.
In the case of SKD operations in the medium, heavy and extra-heavy truck segments, Kirby said there was merit.
The sentiment was mirrored by Stanley Anderson, CEO of Hyundai SA, which has an SKD operation in Benoni. Opened in 2013, it is responsible for the EX8 truck and H100 pickup and is said to have an annual combined output of 3,000 units.
“Being an SKD assembly, it does not form part of the automotive production and development programme (APDP) incentive structures. Our full investment into this assembly plant was based on our commitment to upskilling and job creation,” said Anderson.
The operation employs 30 permanent employees in addition to sustaining jobs across the supplier base, he said, adding that Hyundai SA’s ultimate shift towards CKD depends on scale. “This year, we will be launching the Hyundai GT11 6-ton truck, which will also support localisation.”
Volkswagen Group Africa MD Martina Biene called for reforms to the APDP in favour of CKD manufacturing at the company’s recent brand conference. With its Kariega, Eastern Cape, production facility, the group claims to be the largest private employer in the Nelson Mandela Bay Metro with as many as 3,598 employees and contributions tallying over R4bn in the form of salaries, wages, and benefits.
“Our impact on [the metro] in 2025 equated to R145.96m for electricity, water and waste removal, and a further R39.1m in rates, taxes and licence fees,” it said in a statement.
Bongani Lukhele, director of media relations for the DTIC, said options were being explored to discourage long-term high-volume SKD manufacturing of light motor vehicles. “This may involve policies to encourage a quicker shift to CKD manufacturing when certain volumes get distributed in the domestic market from these SKD operations,” he said.
No timeline was provided for implementation.
Lukhele noted that engagements were underway with existing SKD operations with the aim of transitioning to CKD. “The DTIC favours CKD automotive manufacturing of light motor vehicles, associated with higher levels of value addition leading to the creation of relatively higher technical employment across the manufacturing value chain.
“We do acknowledge that in the truck and bus segment of the value chain the SKD operations are understood against the backdrop of relatively low volumes or [a] small domestic market.”
Following Chery’s acquisition of Nissan’s Rosslyn facility, the South African MD of rising Chinese automaker BYD, Steve Chang, took a mixed view on establishing CKD manufacturing operations. He said South Africa’s position as Africa’s automotive hub, skills base, and established supply chain made for a strong foundation.
“At the same time, global automotive manufacturing is undergoing a shift toward electric vehicles (EV) and plug-in hybrid electric vehicles (PHEV). Competitiveness is driven by cost efficiency, technology readiness, and speed of transition — in those areas, South Africa is at an inflection point,” he said.
In global sales, BYD moved one spot ahead of American giant Ford for the first time in 2025, in sixth place overall, with 4.6-million vehicle sales.
Chang believes South Africa’s alignment with new manufacturing models rather than legacy structures is required to unlock opportunities.
Asked if an existing facility would be of interest, such as the Mercedes-Benz plant in East London, Chang said EV and PHEV manufacturing requirements would make for a complicated transition.
“A potential investment is not simply about acquiring an existing facility; it must be supported by a sustainable long-term plan, including upgrading processes, transferring new skills, and ensuring workforce alignment within the current labour framework,” he said.
Naamsa CEO Mikel Mabasa was not available to comment on the council’s position.
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