National Association of Automotive Component and Allied Manufacturers (Naacam) CEO Renai Moothilal says production plant volume cuts have become all too common in South Africa’s vehicle assembly sector over the past two years.

This assessment comes as Mercedes-Benz South Africa (MBSA) suspended C-Class sedan manufacturing at its East London assembly plant until the end of July, owing to having sufficient volume in stock to meet current demand.

Moothilal says component manufacturers were made aware of the shutdown several weeks in advance.

“Other than the obvious uncertainty and market issues arising out of the tariff situation in the US, this planned closure is synonymous with what has been observed in the South African vehicle assembly sector for around two years now.

“This has a significant impact on business sustainability of component manufacturers.”

Moothilal adds that Naacam has tracked multiple local component plant closures and job losses over the past two years, “which can be seen as directly correlating with the inability to produce at the predicted planned volumes from when a vehicle platform was first announced by the customer vehicle assembler, and this has happened at several assemblers in South Africa since 2023”.

He says this year’s expected policy review of government’s Automotive Production and Development Programme (APDP), under the leadership of the Department of Trade, Industry and Competition, will urgently need to find ways to cushion component companies against this debilitating scenario. At present the vehicle manufacturers receive the highest share of APDP incentives, including a mix of cash and duty rebates based on vehicle assembly and domestic value add.

“If this does not happen, the localisation and employment goals of South Africa Automotive Masterplan (SAAM) 35 will not be achieved,” notes Moothilal.

At the time of the drafting of the masterplan – 2016 to 2018 – the average local content in South African assembled vehicles was below 40%, ranging from around 30% for high-technology, high-value passenger vehicles, to 45% for light commercial vehicles and smaller passenger vehicles.

Almost ten years on nothing has changed, says Moothilal.

The SAAM 35 localisation target has been set at 60% by 2035.

The goal is also to double employment in the automotive value chain, from around 112 000 people to 224 000 people.

August 1 Return
An MBSA spokesperson says the East London plant is scheduled for a planned non-production period from June 24 to July 30.

“An annual non-production period at the East London production plant is standard procedure and it is common cause for production plants to suspend production based on volume adjustments in the production programme.”

The plant is scheduled to resume a two-shift-a-day operation from August 1.

Tariffs and a Tough Market
MBSA is very much dependent on exports to ensure the viability of the local plant as South African premium market sales have plummeted, especially in the face of Chinese imports.

More than 90% of MBSA production at East London is exported to more than 80 markets worldwide.

MBSA’s parent company is currently battling a sluggish German domestic economy, US tariff threats, as well as surging Chinese imports.

The German car maker stated in April that it expected “material impacts” on its financials, “assuming all of the currently implemented and the announced tariffs become effective and remain in place until the end of the year”.

In May, year-to-date total new EU car registrations fell by 0.6% compared with the same period last year.

Also, up until May, battery-electric cars accounted for 15.4% of the total EU market share – an increase from 12.1% in May 2024 year-to-date.

Mercedes-Benz came in at number ten in May among the top 25 most registered battery electric vehicle brands. Volkswagen was at number one and BMW at number three. Both these car makers also have South African plants.

In addition to this, according to JATO Dynamics’ data, 65 808 units were registered by Chinese automakers in May, accounting for 5.9% of total sales across Europe. (This figure excludes Western brands owned by Chinese manufacturers.)

This means that Chinese car brands doubled their market share from the 2.9% recorded in the corresponding month in 2024.

This increase comes despite the EU’s imposition of tariffs on Chinese electric vehicles, with these brands’ renewed momentum partly owing to their decision to push alternative powertrains, such as plug-in hybrids and full hybrids to the region, states JATO Dynamics.

The EU is South Africa’s largest export market.

South Africa does not produce or export fully electric vehicles, but the auto industry does produce hybrids and plug-in hybrids.