SA exported 25,543 new vehicles to the US in 2024. That was 30% more than a year earlier. What will be the number in 2025? Nobody has a clue.
President Donald Trump’s decision to impose a 25% tariff on all automotive imports into the US — vehicles immediately and components from May 3 — has caught everyone on the hop. Though he declared his intent a while ago, everyone hoped he would step back from the brink.
Trump was quoted last week as saying he “couldn’t care less” if US new-car prices go up as a result of the 25% tariff.
SA, on the other hand, cares very much. Mikel Mabasa, CEO of industry association Naamsa, says vehicle exports to the US last year were worth R35bn. That made it the local industry’s third-biggest foreign market. In 2023, the combined value of vehicle and components exports to the US was R27.9bn.
Final 2024 motor industry trade figures have not been published but in 2023, the global value of SA automotive exports was R270.9bn, against R240.9bn of imports.
Until now, SA vehicles and components have landed duty-free in the US, courtesy of that country’s African Growth & Opportunities Act (Agoa), designed to help economic development in Sub-Saharan African countries.
This situation has persuaded some European motor companies, notably BMW and Mercedes-Benz, to build US-bound cars at their SA assembly plants. Part of the rationale for the latest R4.2bn manufacturing investment in BMW SA’s Rosslyn, Tshwane, plant was to ship 20% of X3 car production to the US.
CEO Peter van Binsbergen said earlier this year there were no immediate contingency plans to compensate for lost US sales.
Some Chinese companies have hinted that the lure of duty-free entry to the US could encourage them to invest in SA-based vehicle assembly. They, like the foreign parents of motor companies already in SA, may reconsider the scale of future investments if that market is no longer economically feasible.
Trump’s diktat appears to override any Agoa benefits, which were due to continue until September, before being renegotiated.
It’s not just companies fearing the fallout from the US tariffs. Denise van Huyssteen, CEO of the Nelson Mandela Bay Business Chamber, warns of the potential impact on the Eastern Cape region around Gqeberha.
Volkswagen and Isuzu build vehicles there and Ford has an export-based engine plant. Chinese company BAIC has a plant there and European group Stellantis plans to build one for its Peugeot brand. In addition, there are dozens of tyre and components companies, and a number of truck assemblers.
Along the coast in East London, Mercedes-Benz SA’s car assembly plant and components suppliers are at the heart of that area’s economy.
Van Huyssteen says the Nelson Mandela Bay economy is heavily reliant on the motor industry. Gqeberha and surrounds account for nearly half of all jobs in the SA automotive sector.
She says she is particularly concerned about the effect on local components companies if their vehicle manufacturing clients have to cut production because of reduced exports.
“Our local manufacturing economy, which has been relatively agile and resilient in responding to energy, logistics and enabling environment challenges in the country, is struggling to be competitive versus other manufacturing operations around the world,” she says.
Mabasa takes a broader view, saying the 25% tariffs will have a severe impact on the SA industry at large. “The proposed tariff costs cannot be absorbed by manufacturers, resulting in additional costs for US consumers and a reduced choice of SA-produced brands.”
Mabasa will visit the US for a council meeting of the International Organisation of Motor Vehicle Manufacturers. He says he and his team will use the opportunity “to lobby and advocate for SA positions, highlighting how the current policy postures of the US administration will hinder the progress made in the development of the auto sector in SA”.
We have over 600 US companies in SA ... We value them as investors.
— Parks Tau, trade, industry and competition minister
The motor industry employs 120,000 people directly and hundreds of thousands indirectly in other industries. It accounts for 50% of African vehicle production, 22% of SA manufacturing output and over 5% of GDP.
Naamsa reports that of 599,755 vehicles manufactured in SA in 2024, 390,845 — almost two-thirds — were exported. Besides the US, major markets included the UK, EU and Japan.
Mabasa takes a broader view, saying the 25% tariffs will have a severe impact on the SA industry at large. “The proposed tariff costs cannot be absorbed by manufacturers, resulting in additional costs for US consumers and a reduced choice of SA-produced brands.”
Mabasa will visit the US for a council meeting of the International Organisation of Motor Vehicle Manufacturers. He says he and his team will use the opportunity “to lobby and advocate for SA positions, highlighting how the current policy postures of the US administration will hinder the progress made in the development of the auto sector in SA”.
The motor industry employs 120,000 people directly and hundreds of thousands indirectly in other industries. It accounts for 50% of African vehicle production, 22% of SA manufacturing output and over 5% of GDP.
Naamsa reports that of 599,755 vehicles manufactured in SA in 2024, 390,845 — almost two-thirds — were exported. Besides the US, major markets included the UK, EU and Japan.
Mabasa says the government must urgently engage US authorities “and ensure that SA’s automotive sector is not unfairly penalised under these new trade measures”.
Trade, industry & competition minister Parks Tau thinks it is. He told a media briefing: “Our vehicle exports represent less than 1% of US imports. This across-the-board [tariff] policy disproportionately affects small exporters.”
While China, the EU and other markets consider retaliatory tariffs against the US, Tau says SA can’t act alone. There is no question of penalising US vehicle and components companies qualifying for policy incentives under the 2021-35 automotive production and development programme.
“We have over 600 US companies in SA,” he says. “We value them as investors.”
He, like international relations & co-operation minister Ronald Lamola, wants clarity from the US government, not just about auto tariffs but also about a broad tariff of 31% on other imports from SA.
Trump says the tariff, one of many different ones imposed on countries around the world, is a reciprocal penalty, mirroring tariffs imposed by SA on US goods. Lamola says this is untrue and that the average tariff is 7.6%. He says the government wants the US to explain how it came up with the 31% figure.
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