By: Evan Partridge - Senior Manager, Automotive CHEP Sub-Saharan Africa

For decades, South Africa’s automotive assembly line has fuelled global demand for some of the world’s finest luxury vehicle brands. However, as the country contends with heightened global uncertainty and grapples with a higher tariff regime, we find ourselves at a critical point for the sector.

As an industry, we now face a dual imperative: strengthen domestic supply chains while weathering the headwinds of intensifying international protectionism, most notably, the 30% U.S. tariff increase.

According to The Automotive Business Council (Naamsa), the U.S. is the third-largest destination for South Africa’s automotive exports, with approximately R35 billion worth of vehicles shipped in 2024, accounting for 6.5% of total vehicle exports. The proposed tariff increase will severely impact local original equipment manufacturers (OEMs) operating in South Africa.

Some manufacturers have already reported production reductions which could have a significant ripple effect across the supply chain, including adjustments to packaging requirements, logistics flow, and demand for reusable transport solutions.

Amidst these challenges, SA’s automotive sector is also navigating pivotal negotiations around wage deals, placing added pressure on OEMs that are already under strain.

The growing competition from Chinese and Japanese vehicle imports, which offer strong value at lower price points, are challenging the traditional dominance of OEMs, a structural shift that is not just economic but geopolitical as well.

In this climate, it’s incumbent on suppliers like us to maintain supply chain stability or risk becoming casualties as global capital expenditure declines and appetite wanes for investment in proprietary packaging solutions.

Maintaining supply chain sustainability

This is where the value of pooling solutions becomes clear. By tapping into a pooled model, as pioneered by CHEP, companies can access high-quality, reusable packaging without the burden of heavy upfront capital investment. It’s a financially agile approach and one that’s already proven effective globally. Backed by strong financial infrastructure and global support, our pooling model offers a scalable solution that addresses both operational needs and cost-efficiency – especially helpful for automotive parts and components that are making their way across the continent.

Ultimately, the goal is to maintain supply chain stability during this critical time. Any disruption, especially line stoppages due to packaging shortages can be incredibly costly. By ensuring packaging is readily available and strategically positioned, we help our partners keep production running smoothly and maximise throughput.

Hope on the horizon

Despite the current situation, not all is doom and gloom for the country’s automotive sector. There are encouraging developments on the horizon that point to renewed investment and potential growth, particularly from emerging OEMs.

One of the most promising developments is the entry of Stellantis, which has announced plans to establish a manufacturing facility in South Africa beginning in 2026. This represents a significant vote of confidence in the region’s long-term potential as a strategic manufacturing base on the continent.

In parallel, Mahindra is reportedly considering a plant in Durban, further signalling growing interest from global players. While Chery South Africa recently announced that it’s conducting a feasibility study into local vehicle production in SA, indicating a potential shift toward domestic manufacturing that could create jobs and support local supply chains.

If realised, these investments would enhance regional manufacturing capacity and create new opportunities for supply chain partnerships.

These developments are important not just from a growth standpoint, but also because they reflect a diversification in the OEM base which can help strengthen South Africa’s resilience to global disruptions and shifts in demand.

Balancing optimism with realism

That said, we must acknowledge that established OEMs continue to face considerable challenges. Long-standing players operating in South Africa remain under pressure from imports, economic constraints and regulatory uncertainty.

As such, the industry sits at a crossroads where both risk and opportunity coexist. Our role as a logistics and packaging partner is to remain agile, solution-oriented and ready to support both legacy and new market entrants alike.