Mikel Mabasa said Mercedes-Benz will feel the pinch of the high tariffs.
The CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa) has warned that United States (US) tariffs on exports could have devastating effects for the Eastern Cape, particularly in East London.
The US is the second-largest export market in the world.
Mikel Mabasa was discussing the potential impact of the 30% US tariffs on the automotive industry if alternatives are not implemented at the DealerCon summit, hosted by Cars.co.za, on Wednesday in Sandton, Gauteng.
The DealerCon brought together key industry players to discuss the shifts in the industry and potential solutions.
Retrenchments due to tariffs?
Ford recently announced the retrenchment of 470 employees at two of its plants, citing evolving market demands.
Mabasa told The Citizen that the automotive industry is very resilient; therefore, the tariffs would not result in massive retrenchments.
“We are fortunate that there is only one brand that is impacted by the tariffs, and it is Mercedes-Benz. Other brands that are manufactured in the country are not exporting to the US.”
He highlighted that Mercedes-Benz will feel the pinch of the high tariffs. BMW used to export a high volume to the US, but the brand has diversified its market, and they are not affected by these tariffs.
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East London to feel the pinch of tariffs
Mercedes-Benz manufactures its C-Class model in East London and exports some of these to the US. Mabasa said the brand plays a significant role in the Eastern Cape’s economy, not forgetting its role in employing people in the province. He added that the US tariffs could result in the town becoming a ghost town.
However, if Mercedes-Benz and the government do not find ways to mitigate the losses from the US tariffs, the car company could face significant financial distress, which could result in retrenchments or even the closure of the plant.
Mercedes-Benz has previously halted production at this plant, but said it is not due to the tariffs, but just scheduled maintenance.
Unemployment to increase in Eastern Cape
The province has previously been shaken by multiple retrenchments. Out of the 470 employees affected by Ford retrenchments, 73 are from the Struandale engine plant in Gqeberha, while the rest are from the Silverton assembly plant in Pretoria.
Tyre giant, Goodyear, closed its plant in Nelson Mandela Bay. The closure impacted more than 900 jobs. The company stated that the closure is a result of the restructuring process it has initiated.
The National Union of Metalworkers of South Africa (Numsa) stated that the closure of Goodyear is contributing to the town becoming a ghost town, given that ContiTech, a subsidiary of Continental, has also shut down.
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Plans to help Mercedes-Benz
Mabasa added that they are concerned about the tariffs, and they do not want East London to become a ghost town. He is hopeful that the talks the minister of Trade, Industry and Competition (the DTIC), Tau Parks, is engaging in with the US will yield success.
“The minister is in the US this week to try to find a solution with the US and secure a deal before the end of this month. The end of September is particularly critical because the African Growth and Opportunity Act (Agoa) is set to expire.
“We are working very closely with Mercedes-Benz to look into opportunities to export, especially in other African countries, because it is important for every brand to start diversifying.”
Mercedes-Benz has not replied to The Citizen’s enquiry, sent in early September, on whether any retrenchments are planned.
BMW not worried
Following the retrenchments at Ford, The Citizen reached out to BMW to inquire whether any retrenchments are planned.
BMW Group told The Citizen it is not looking to retrench any time soon, as it has recorded impressive growth over the past financial year.
“During the first two quarters of 2025, BMW Group South Africa significantly outperformed its key premium competitors in passenger vehicle sales,” it said. “BMW Group South Africa remains committed to its long-term plans and growth, and there are currently no plans for large-scale retrenchment at this time.”
Apart from BMW and Mercedes-Benz, The Citizen reached out to Volkswagen and Toyota, with no success.
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