Mercedes-Benz SA (MBSA) has suspended vehicle manufacturing operations at its East London assembly plant until the end of July.
While the company says “planned operational shutdowns” are not unusual, there is little doubt that April’s imposition by the US of a 25% tariff on imported cars has contributed to the decision.
The US is an important customer for C-Class cars made in East London. MBSA confirms production was suspended early last week and is due to resume on July 31.
While it does not specifically blame US tariffs, it says: “It is common cause for production plants to suspend producing based on volume adjustments in the production programme.”
Since US President Donald Trump announced the 25% tariff in early April to force US and foreign automakers to invest more in US-based manufacture, SA government and motor industry officials have warned of potentially serious consequences for the export efforts of companies like MBSA and BMW SA.
Mikel Mabasa, CEO of local industry association Naamsa, said the full impact of the tariffs would probably be felt from July.
In the meantime, MBSA states: “We are still exporting vehicles to the US.”
The US originally planned to hit automotive components imports with the same 25% penalty but delayed the decision after US motor companies protested that they needed more time to find local components suppliers.
Asked directly on Friday if the car tariffs contributed to the current shutdown, MBSA responded: “We are continuously assessing the impact of the introduced US tariffs. SA and the US remain in a constructive dialogue to reach a fair, negotiated solution that is in the interests of both sides.
“As a global company, we rely on constructive co-operation and policies that promote mutually beneficial trade across international markets. Mercedes-Benz supports free and fair trade that underpins prosperity, growth and innovation.”
The company won’t say how much production will be lost between now and end-July but an executive at an MBSA components supplier said: “We understand there are more than enough vehicles already built to meet immediate demand.”
MBSA says it has kept suppliers fully informed about the decision.
The current C-Class range, which includes petrol, diesel, hybrid-electric and high-powered AMG variants, has been built in East London since 2021 after a R13bn investment. The German parent company named East London as the global “lead plant” for the car.
In June 2024, however, MBSA CEO Andreas Brand announced that the company would retrench up to 700 of its approximately 3,200 employees because of falling global demand for the C-Class, and cut daily production shifts from three to two.
More than 90% of production is exported, mainly to North America, Europe and Asia.
MBSA said the current situation would not cause more job losses: “We do not anticipate any further restructuring of our manufacturing operations because of this non-production period.”
With luck, this will be Brand’s last challenge at MBSA. He was appointed manufacturing executive director and MBSA joint-CEO in May 2022, but then assumed the solo CEO title after his marketing peer, Mark Raine, was transferred overseas.
Now it’s Brand’s turn to go. He will return to his native Germany at the end of November to assume manufacturing responsibility for seven Mercedes-Benz assembly plants around the world. These will include strategic oversight of East London.
From December 1, the new CEO will be Abey Kgotle, MBSA’s executive director of human resources and corporate affairs since 2017.
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