SA motor companies say they will start to feel the full force of US President Donald Trump’s 25% automotive import tariffs from July after export orders have been fulfilled. However, they still hope SA government officials can persuade the US to mitigate some of the effects by then.
Mikel Mabasa, CEO of vehicle manufacturers and importers association Naamsa, said on Monday that not much change was expected to exports to the US in this quarter. “Orders have been finalised and vehicles are being built.”
Early this month the US imposed a 25% tariff on vehicle imports from around the world. A similar penalty on automotive components is set to follow on May 3.
But National Association of Automotive Components & Allied Manufacturers CEO Renai Moothilal said there had been no “immediately apparent” decline in orders. He said most SA orders should be secure in the short term because US vehicle manufacturers will struggle to find immediate alternative sources.
Last year SA exported 25,543 vehicles worth about R35bn to the US, a near-30% volume increase on the previous year. The main exporters were BMW SA and Mercedes-Benz SA.
Moothilal said R4.5bn of SA-made components made their way to the US in 2024. In 2023, the last year for which official aggregate trade figures are available, more than 10% of total SA automotive exports went to the US at R27.9bn.
The CEOs of SA’s seven major vehicle manufacturers — representing BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen — met on Thursday to fashion a united response.
But Mabasa was clear that exporters need help.
“If [export] market access is constrained, our government must co-create a suite of offset mechanisms to help manufacturers retain production volumes and continue investing in local content. This is especially urgent in export-dependent plants where volume certainty underpins investment decisions,” he said.
“The government needs to initiate and implement short-term relief measures to insulate those plants that could be exposed.”
The industry was “seeking ways to insulate itself” from other geopolitical issues, he said.
This is likely to include a recrafting of the 2021-35 Automotive Production Development Programme (APDP) and the SA Automotive Master Plan under which it operates.
The APDP lays down the manufacturing rules for vehicle and components companies, including investment- and production-based incentive programmes, while the master plan paints a broad, long-term vision.
Critics say they are no longer fit for purpose. Not only are developmental targets such as doubling employment and vehicle production, a 50% increase in local content and rapid growth in black participation patently unachievable within the proposed time frames, but the programmes did not anticipate the rapid global transition to electric vehicles (EVs).
Moothilal said the components sector was particularly disadvantaged under the APDP. “Greater incentivisation of components production is needed. There are opportunities ... but they are not being unlocked at scale. We need urgent policy shifts to drive localisation and support export diversification.”
The APDP is also said to be failing to protect the local industry from unfair competition. Chinese brands are accused of benefiting from government subsidies in their own country, allowing them to undercut the prices of established SA brands.
Ironically, some Chinese companies that have stated their desire to manufacture vehicles in SA appear to agree that the APDP does not give sufficient protection against imports.
Mabasa said: “They say they want to invest but say the APDP does not insulate them enough to justify it.”
Importers are adding their voices to the chorus of complaints. Last week Audi called for government intervention to protect established brands, some of which have billions of rand in historic investment in SA, from price-cutting newcomers.
Audi, part of the Volkswagen group, is one of a number of premium brands, including BMW and Volvo, to have cut dealer numbers in response to plunging sales. The chief reasons are shrinking consumer disposable income and a flood of new, cheaper brands, many of them Chinese.
The situation is complicated by APDP rules. Under the programme vehicle manufacturers use production volumes to earn duty credits, which then reduce tariffs on their own imports. However, in most cases the value of these credits, known as production rebate credits (PRCs), far outweighs import needs so they are traded to importers, which use them to cut their own tariff commitments and reduce retail prices.
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