Proposed vehicle import tariffs divide sector over jobs protection and car prices

The South African government is considering introducing higher import tariffs on vehicles from China and India, a move that has sparked intense debate across the sector.

Some argue that these tariffs are necessary to protect local manufacturing and jobs.

The other side of the debate has critics saying it could raise vehicle prices, harming the retail sector by limiting access to affordable cars.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) Chief Policy Officer, Tshetlhe Litheko, explains that, besides tariffs, there is also a bound rate.

This is the maximum, legally committed import duty that a World Trade Organisation (WTO) member country agrees to apply to specific goods.

"The actual rate for getting a car into South Africa is currently 25%, and the bound rate is 50; South Africa cannot go beyond the 50% mark."

Litheko says that this works across the board.

"You cannot be selective around which imports attract the new actual rate, so once you apply it, you're not going to apply it only to imports from China and India – it's going to be imports from any other country.

"You also cannot discriminate between which vehicle types you're going to impose that particular tariff increase on. It's going to apply to all vehicles from all countries."

This blanket approach is certain to affect cash-strapped consumers and the growth of the local manufacturing sector.

Litheko says that NAAMSA aims to safeguard the industry.

"Let's be deliberate around where we increase tariffs, and why."

To listen to Litheko in conversation with 702's Clement Manyathela, use the audio player below: