But says it will be the first to blow the whistle on firms exploiting loopholes to avoid SKD component import duties.
Mahindra South Africa, the wholly-owned subsidiary of the Indian automotive giant, has defended semi-knocked-down (SKD) vehicle assembly in South Africa as a first step by original equipment manufacturers (OEMs) towards large investments in full-scale vehicle manufacturing in the country.
However, Mahindra SA CEO Rajesh Gupta said on Tuesday the company is not supportive of SKD manufacturers using a loophole to import components into South Africa duty-free as aftermarket parts and then using them in their SKD operations.
Mahindra SA in August 2025 officially opened its new, purpose-built SKD vehicle assembly plant at the Dube TradePort special economic zone in KwaZulu-Natal as it entered its third decade in South Africa.
The facility assembles Mahindra’s Pik Up bakkie range.
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SKD loophole
Speaking exclusively to Moneyweb on the sidelines of a briefing about Mahindra SA introducing a sophisticated digital customer service programme named Reach Out, Gupta said he is unaware of companies using this loophole in South Africa but would “be the first person to be the whistleblower” if he did become aware of it.
“Rather than being protective of [such] malpractices, I will be the first to raise those matters.
“[In line with] the idea of having a governance-based business, Mahindra has a very high standard of governance and we will never fall into these cheap dynamics,” he added.
Gupta’s comments follow Peter van Binsbergen, president of automotive business council Naamsa and CEO of BMW Group South Africa, confirming last week that domestic vehicle manufacturers have asked the Department of Trade, Industry and Competition (dtic) to close the SKD loophole, which allows these manufacturers to operate “close to duty-free”.
Van Binsbergen said SKD manufacturers are achieving this by using aftermarket categories to import components, such as the engine, duty-free.
“They are actually having a very easy time in South Africa, without creating any investments and hardly creating any jobs. But we are asking for small adjustments, not for the big hammer approach,” said Van Binsbergen.
The ‘loophole’ issue was also raised in a meeting by parliament’s Portfolio committee on Trade, Industry and Competition, on the implementation of the SA Automotive Masterplan (SAAM).
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Small volumes – but it opens doors, says Mahindra
Gupta on Tuesday added that SKD manufacturing accounts for less than 1% of the total automotive industry’s volume.
However, he said SKD is a mechanism to create interest among the rest of the OEMs to learn about the business, create a local vendor base, and “get to a certain level so that they can convince themselves and their boards sitting in different parts of the world of investing big”.
“Not every company will have a desire to put R5 billion-plus to start manufacturing.
“If we kill that idea [SKD], we are actually killing any other possibility of influencing any manufacturing in this part of the world,” he added.
“That will be very counterproductive to the entire piece [of the global market] which South Africa needs badly.”
Gupta said in South Africa there is a need from a consumer perspective for a specific kind of car while affordability has become of prime importance.
He said the focus of the entire automotive industry should be on how to create the possibility of attracting low-cost vehicle manufacturing to this part of the world.
“If we succeed, then this country’s manufacturing of automotives will again come into the global supply chain, which it used to be in a big way, and start influencing business, not only here, but the rest of Africa, Latin America and many other parts.
“And why not use SKD to make a start in getting into it [full-scale manufacturing]?”
He points out that: “Other than China, India and certain countries in Europe and America, [automotive] manufacturing is not very prevalent. It’s South Africa or Morocco. Australia is not manufacturing anymore. But Thailand is now manufacturing in a big way.”
Gupta questions why South Africa has been unable to become a big automotive manufacturing hub like Thailand, and why it has taken “15, 20 or 30 years to realise that the trend line is changing”.
He says South Africa’s automotive industry has been overly focused on Europe and US America, and questions why the country continues to import vehicles that could be manufactured locally.
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CKD feasibility study
In 2025, Mahindra SA took its first step towards the possible establishment of a completely knocked-down (CKD) vehicle assembly facility in South Africa by signing a Memorandum of Understanding (MoU) with the Industrial Development Corporation (IDC) to conduct an in-depth feasibility study on the project.
The study will assist Mahindra SA and the IDC to make an informed assessment before any future decisions are taken.
Although the MoU signals Mahindra’s intent to explore local manufacturing opportunities, it is purely an evaluation, and Mahindra has not made any firm commitment to establishing a CKD vehicle assembly facility at this stage.
Mahindra reported total vehicle sales in South Africa of 18 097 for the 2025 calendar year, representing a massive 40% year-on-year growth.
By contrast, total new vehicle sales in South Africa grew by about 15% to recover to pre-Covid levels, with much of this growth driven by the large number of new brands that have entered the market, particularly Chinese brands.
Mahindra was the third best-performing volume brand in South Africa for 2025, having been the top-performing brand for three of the past six years.
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Reach Out programme
At the core of Mahindra SA’s Reach Out customer service programme is its commitment to address queries or concerns within 24 hours.
The simple ‘Reach Out’ process allows customers from any part of South Africa to contact the company via WhatsApp.
Mahindra then uses robust digital tools to engage with customers, categorise their queries, route them to the stakeholders concerned, and track every concern from first contact to final resolution, with clear ownership, timestamps and accountability at every stage – all within 24 hours.
This article was republished from Moneyweb. Read the original here.