The German automaker is in discussions with GWM over potential co-manufacturing at its facility in the port city of East London.
Mercedes-Benz is investigating allowing China’s Great Wall Motor (GWM) to use its South African factory as US trade tariffs cloud the site’s long-term viability. The German automaker is in discussions with GWM over potential co-manufacturing at its facility in the port city of East London.
According to a Bloomberg report, representatives from GWM have presented a proposal to senior officials at South Africa’s Department of Trade, Industry and Competition outlining the Chinese company’s interest in manufacturing vehicles at the plant.
In an emailed statement to Just Auto, a company spokesperson said: “Mercedes-Benz strives to ensure that all its production sites remain globally competitive, are at an optimal operating point and are adapted to new requirements whenever necessary.”
The spokesperson added that the company does not comment on speculations about future product portfolio and production planning process.
GWM South Africa said it continues to evaluate opportunities to expand its presence in the country but did not provide further details. Talks between the two companies are ongoing with no agreement finalised, though alternative forms of cooperation remain under consideration.
Allowing another manufacturer to produce vehicles at the plant could help address unused capacity, lower operating costs and support jobs as global carmakers face growing competition from lower-cost imports from China and India.
Mercedes is simultaneously assessing whether the East London plant could be repurposed as a global centre for processing end-of-life batteries from passenger vehicles. The facility has produced the C-Class sedan for export to the US since 1997.
Previously, the plant benefited from the African Growth and Opportunity Act, which allowed vehicles exported from South Africa to enter the US duty-free. However, the plant’s outlook changed after President Donald Trump imposed a 30% tariff on South African goods entering the US in August last year. Although the US Supreme Court suspended the measure in February, the administration is preparing to introduce a 15% global levy on imports into the US starting this month.
Mercedes invested around €600m ($694m) in 2022 to upgrade the East London manufacturing facility. A deal to share the factory that employs about 2 400 people could reduce overcapacity, lower operating costs and preserve jobs as established manufacturers from Europe, the US and Japan lose market share to cheaper imports from China and India.
Just one in three cars sold in South Africa are made locally, down from 56% two decades ago. Automakers, including a local unit of Volkswagen AG, have called on the government to safeguard the industry against a flood of shipments, partly through improved tax breaks.
Even before the threat of tariffs, Mercedes in 2024 cut a shift at its plant and shed about 700 jobs.
Chinese automobile brands are rapidly becoming a prominent force in the African automotive market, driven by competitive pricing, modern technology, and vehicles specifically designed for local conditions. In South Africa, their rise has been particularly striking. Chinese brands recorded a roughly 19% increase in sales in 2024, capturing 11.8% of the new vehicle market – up sharply from just 2.8% in 2020.
Even more telling is the pace of entry. Nearly half of the 14 Chinese automotive brands now operating in the country launched only within the past year. As these automakers accelerate their global expansion, many are turning to overseas production to cushion against potential trade barriers targeting imports of Chinese-made vehicles.
