Business Leadership South Africa CEO Busi Mavuso has expressed concern in her latest newsletter about South Africa’s automotive exports to the US, saying that, to forestall the impact of tariffs on the local industrial base, more engagement with the US needs to take place.

She also calls for a reassessment of the South African Automotive Industry Masterplan (SAAM) that was published in 2018.

“The US is the fastest-growing region for our vehicle exports and the Trump administration’s tariffs will have a significant impact on particular models that are exported there,” Mavuso explains.

The sector faces a potential 30% tariff on South African imports in a few months’ time.

The US accounts for about 6.5% of South Africa’s vehicle exports.

Mavuso says more US leaders should be engaged to shift course to help preserve South Africa’s automotive value chain, but also emphasises the importance of ensuring the African Continental Free Trade Area (AfCFTA) Agreement is fully implemented.

She says the South Africa automotive industry, which accounts for 60% of South Africa’s manufactured goods exports and is the single-largest domestic manufacturing sector, already faces challenges such as competition from imports and weak domestic demand.

“South African vehicles only comprise 0.1% of those sold in the US, but it helps diversify exposure to Chinese manufacturing, which is an increasingly important priority for the US government.

“If the US were closed to South African goods, South Africa’s wider geopolitical interests would shift to other strategic relationships, to the cost of US influence. The Trump administration has said it wants to negotiate. We must take it up and aim to clear trade barriers for the benefit of both our economies,” Mavuso states.

Moreover, elaborating on the SAAM reassessment, the BLSA CEO says stakeholders must revisit the plan to assess how the industry can cope with the US tariff shock and ensure it is geared for the current world dynamics.

The SAAM envisions the industry growing by 60% by 2035, but the world for which the plan was set up has changed.

“It is now more important than ever, for example, to focus on the rest of Africa. To do so, we must ensure the AfCFTA Agreement is fully implemented for vehicles. The continent buys 1.3-million new vehicles a year, a figure which will grow significantly,” Mavuso highlights.

She says automotive manufacturers and suppliers must focus on brands and vehicle types that are suited for the continent, which has much to gain from lower-cost mobility solutions.

“We need to ensure supply chains adapt for these outputs and our skilling system delivers people with the right skills. The plan already envisages South Africa as a manufacturing hub for the continent but such long-term plans need to be dynamic and adapt to the changing environment,” Mavuso adds.

In addition to the US tariffs, Europe’s Carbon Border Adjustment Mechanism poses a further challenge for South African-manufactured vehicles despite already being the biggest market for the country’s vehicle exports.

However, the EU must also deal with American trade shocks that could provide new opportunities for South African exports. The rest of the world’s markets will also be looking to forge new deals, Mavuso says.

“Business clearly recognises the importance of the vehicle manufacturing sector. It has critical spill over effects into the rest of the economy, supporting industrial capacity that enables many other producers.

“It is a major employer and export revenue earner. It is, within a general theme of deindustrialisation over the last three decades, the one exception. It is also a fine example of how business and government can work together to develop industry.”

While the first Motor Industry Development Plan, launched in 1995, transformed the vehicle manufacturing industry from a domestic producer to an export-oriented manufacturing powerhouse, the SAAM must adjust to the strange new world South Africa finds itself in where the world’s former champion of free trade and globalisation has become its biggest challenges.