APDP Phase 2: DTIC to Phase Out Policy Support for Semi-Knocked-Down Vehicle Assembly

Posted 15 October 2026 Written by Acts Online
Category Trade

Brought to you by SA Legal Academy: The Department of Trade, Industry and Competition (DTIC) intends to phase out policy and customs incentive support for the manufacture and export of partially assembled and finished motor vehicles under Phase 2 of the Automotive Production and Development Programme (APDP).

Administered under item 317.04 of Schedule 3 to the Customs and Excise Act, No. 91 of 1964, the APDP provides duty rebates and refunds to registered motor vehicle manufacturers and original equipment manufacturers (OEMs) importing components for local assembly. The statutory framework governs customs incentives designed to promote domestic value addition and investment under the South African Automotive Masterplan through to 2035.

The policy change emerged from the ongoing statutory review of APDP Phase 2, as confirmed in an address delivered by the Minister of Trade, Industry and Competition, Parks Tau, at the South African Auto Week in Durban. The forthcoming regulatory adjustments aim to curb customs support for low-value-add ‘semi-knock-down’ (SKD) operations, disincentivising the establishment of assembly plants that bypass substantive domestic component manufacturing.

The anticipated regulatory shift involves:

  • Phasing out customs duty rebate entitlements and export credits for partially assembled and finished vehicle exports under Schedule 3;
  • Directing statutory tariff support under item 317.04 exclusively toward substantive manufacturing, including completely knocked down (CKD) vehicle assembly; and
  • Tightening eligibility thresholds to preclude prospective assemblers from claiming local production incentives without domestic supply-chain integration.

What this means for you, your business, or your clients

  • For yourself: Trade and customs law advisors must track forthcoming amendments to Schedule 3 rebate provisions in the Government Gazette to ensure regulatory filings align with the updated APDP Phase 2 rules.
  • For your business: Advisory and customs compliance practices must evaluate existing client tariff benefit models to determine the financial exposure of assembly lines operating on an SKD basis.
  • For your clients: Vehicle assemblers and importers relying on rebate item 317.04 must reconfigure operational models toward completely knocked down (CKD) production and higher local content to avoid losing duty rebate and refund entitlements.

Originally published at https://legalacademy.co.za/news/read/automotive-sector-policy-support-for-partially-assembled-vehicle-export-to-change

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