Latest news with #MikelMabasa
Arabian Post
15-07-2025
- Automotive
- Arabian Post
Exports Collapse: South African Cars Shut Out of U.S. Market
South African vehicle shipments to the United States have plunged after U. S. import tariffs were escalated, posing a serious threat to jobs and industrial hubs across the country. Export volumes dropped by 73 per cent in the first quarter of 2025 and declined a further 80 per cent in April and 85 per cent in May, according to figures from the National Association of Automobile Manufacturers of South Africa. The tariffs, introduced under U. S. trade policy changes that began on 2 April and expanded in April and May, include a 25 per cent levy on cars, widened to cover auto components, and a looming 30 per cent rate on all South African vehicle imports from 1 August. These measures have effectively stripped away benefits previously enjoyed under the African Growth and Opportunity Act, under which U. S.-bound South African vehicles had duty-free access. Naamsa CEO Mikel Mabasa warned that the crash in exports is 'not just a trade issue – it's a socio‑economic crisis in the making', highlighting the potential for factory shutdowns and mass unemployment, particularly in assembly centres such as East London, where the industry forms the backbone of local economies. South Africa's auto sector accounted for 64 per cent of AGOA trade with the U. S. in 2024, generating 28.6 billion rand in revenue. ADVERTISEMENT The export decline has already begun, with only 1,703 vehicles and light commercial units shipped in the first quarter of 2025, compared to 6,840 in the same period of 2024—a drop of more than 75 per cent, according to BusinessLIVE. The situation deteriorated further in subsequent months, pushing total declines beyond 87 per cent in certain reports. Industry leaders warn that automakers such as Mercedes‑Benz South Africa may be forced to scale back operations, absorb rising production costs or even delay future investments. The wider supply chain feels the strain too; component manufacturers, logistics firms and related service providers are all facing potential closures and layoffs. Efforts to negotiate relief have so far foundered. A diplomatic proposal submitted in May envisaged a mutually beneficial trade package—including a duty‑free quota of 40,000 South African vehicles per year and duty‑free access for locally produced components—but it failed to prevent the August tariff imposition. Trade and Industry Minister Parks Tau confirmed in parliamentary responses that ongoing negotiations include broader requests, such as increased U. S. investment in South African liquefied natural gas in exchange for auto exemptions. South African President Cyril Ramaphosa has criticised the U. S. tariff rating as misguided, noting that half of U. S. exports to South Africa are untaxed and the remainder attract an average tariff of only 7.6 per cent. He remains optimistic that diplomacy can mitigate losses—stressing that the August 1 date could still bring modifications, contingent on negotiations. The broader economic impact is already being projected. South Africa's GDP growth estimate for 2025 was reduced by 0.3 percentage points to 1.2 per cent in May, a downgrade partly attributed to the fallout from these tariffs. The South African Reserve Bank has responded with a repo rate cut to 7.25 per cent, seeking to support domestic activity. With the U. S. set to enforce its tariffs under Section 232, targeting vehicles, auto parts, steel and aluminium, the South African rand has remained volatile—trading near 18 to the dollar—amid investor uncertainty. Meanwhile, South Africa is fast-tracking plans to diversify export partnerships, targeting markets in Asia, Europe, the Middle East and within Africa. Naamsa has called for government support to cushion the economic blow, including incentives for exporters and support schemes for affected workers. Industry analysts argue that while diversification holds promise, it cannot be implemented swiftly enough to offset the immediate losses from the U. S. market collapse.
Daily Maverick
15-07-2025
- Automotive
- Daily Maverick
Socioeconomic crisis looms as US tariffs hit Eastern Cape's vital automotive industry hard
The Automotive Business Council says it is hopeful that a proposal for 40,000 tariff-free vehicles for export to the US will find favour, as the impact of tariffs in their current form will be catastrophic for both the manufacturing industry and the Eastern Cape. 'This is not just a trade issue, it's a socioeconomic crisis in the making,' CEO of the Automotive Business Council (Naamsa) Mikel Mabasa said on Tuesday. The organisation, like many others in the Eastern Cape, is grappling to come to terms with the devastating impact of export tariffs imposed by the United States. Mabasa said the export tariffs threatened thousands of jobs in the automotive sector, disrupted hard-won industrial capabilities, and risked devastating communities such as East London, where the automotive sector formed the economic heartbeat of the town. He said Naamsa was, however, encouraged by South Africa's early proposals for a quota of 40,000 duty-free vehicle units per annum, 'which would allow us to retain our footprint in this key market'. He said that if the country could not retain export markets such as the US, 'we risk turning vibrant industrial hubs into ghost towns'. Ripple effects through the value chain He said the ripple effects of production loss due to disappearing export markets would be felt throughout the automotive value chain – from component manufacturers to logistics providers, and across the thousands of workers and families who depended on the sector for their livelihoods. 'Export diversification and finding new markets is not something that can be achieved overnight. Our global competitors are already redirecting their exports into markets we traditionally serve. This intensifies the pressure on our original equipment manufacturers (OEMs), who must now absorb rising costs, reduce production, and reconsider future investments,' he said. Urgent diplomacy needed 'We have also taken note of President Cyril Ramaphosa's formal response on the same day, which confirmed South Africa's diplomatic and strategic approach to this matter. He said South Africa's automotive sector was particularly vulnerable to the 25% sectoral tariff imposed under Section 232 of the US Trade Expansion Act of 1962, which specifically targeted automotive exports. This escalation in trade tensions poses a serious threat to one of South Africa's most globally integrated and export-oriented industries. He said the United States had consistently been South Africa's second-largest trading partner and key export destination for South African manufactured vehicles. Agoa at risk – billions in trade and thousands of vehicles 'Since the inception of the African Growth and Opportunity Act (Agoa), the automotive industry has benefited from substantial two-way trade and investment. In 2024, the auto sector accounted for 64% of all Agoa trade between South Africa and the US, generating R28.6-billion in export revenue, with 24,681 vehicles exported to the US under Agoa,' Mabasa said. He said the effect of just the anticipation of the high export tariffs, however, had been devastating to the industry and had an immediate effect on trade performance. He said that even before the formal effect of the tariffs, vehicle exports to the US dropped by 73% in the first four months of 2025, followed by a further decline of 80% and 85% in April and May, respectively. 'This represents a risk of a direct loss of vehicle and component export volumes, and annual export earnings, which would be difficult to recover in the short term,' he said. OEMs under pressure But the news is even worse, he said, as tariff disruptions placed major pressure on [OEMs], who had made long-standing industrial commitments to South Africa and invested significantly in local manufacturing, skills development and export infrastructure. The SA automotive industry contributes 22.6% of the country's total domestic manufacturing output and directly supports 110,000 formal sector jobs. Mabasa said Naamsa welcomed the SA government's continued diplomatic engagement with the US, including discussions held on the sidelines of the US-Africa Summit in Luanda on 23 June 2025, and the submission of SA's Framework Deal on 20 May 2025 to address the concerns raised by the US government. 'We urge both governments to accelerate negotiations toward a balanced, rules-based trade agreement. We are encouraged by early proposals for a quota of 40,000 duty-free vehicle units per annum, which would allow us to retain our footprint in this key market. It's vital that we use this opportunity to preserve the business case for continued investment', he said. Mabasa, however, emphasised the need to prepare for a more uncertain and competitive global landscape. Behind every statistic are people and communities 'Naamsa is equally concerned about the livelihood impact of these developments. Behind every tariff statistic are real people – auto workers, supply chain technicians, logistics operators and their families. Nowhere is this more visible than in East London, a community that has grown and thrived on the back of automotive exports. 'The erosion of this trade threatens to unravel decades of socioeconomic progress. We urge all parties involved in the diplomatic negotiations to recognise the strategic and social importance of safeguarding mutually beneficial trade frameworks like Agoa, and to avoid short-term decisions that carry long-term consequences for vulnerable regions,' Mabasa said. CEO of the Nelson Mandela Bay Business Chamber Denise van Huyssteen, said it was clear that the US trade tariffs, planned for implementation on 1 August, would have a disproportionate impact on the Eastern Cape economy given its high reliance on the automotive sector. 'The initial most vulnerable automotive and components manufacturers will be those who directly export products to the United States. The tariffs will put them in a very uncompetitive position, making it difficult to continue to do trade with the US, which could lead to export orders drying up. This, in turn, will have a knock-on impact on direct and indirect suppliers located in East London and Nelson Mandela Bay, and the overall supporting ecosystem around these manufacturers, who may or may not be able to withstand the loss in volume. 'Additionally, as the volumes, especially of [OEMs], potentially decline, economies of scale are diminished, potentially putting some components manufacturers in a position where they are unable to continue a viable supply to their other OEM customers located elsewhere in the country,' she said. Competitiveness crisis She said the tariff structure also meant that manufacturers who exported products to other parts of the world may now be competing with other countries that had significant cost advantages over South Africa, as they faced lower tariffs or could absorb the tariffs. 'Essentially, the global trade order has been upended, and this is likely to affect global manufacturing footprints and where the best locations will be to produce products in the future,' Van Huyssteen said. She said that switching markets was not a quick solution as these measures took time to implement, and neither would 'replace' current OEMs with new ones. 'On this score, and in order to retain employment, it is vital that any potential incoming OEM investors commit to utilising local components for their manufacturing operations,' she said. Unemployment warning for Nelson Mandela Bay She said the chamber also remained deeply concerned about the devastating impact these 'tariff wars' might have on Nelson Mandela Bay's economy and the thousands of jobs supported directly and indirectly through the automotive industry and its supply chain. 'This, in turn, will add to the already unacceptably high unemployment and poverty levels in Nelson Mandela Bay and the Eastern Cape. It must be remembered that Nelson Mandela Bay is home to the greatest number of automotive component suppliers in the country. Furthermore, 41% of the country's automotive manufacturing employment is based in the Bay,' she said. Call for government urgency 'Given how small SA's economy is, the country's response should not be to retaliate, but rather to look internally and consider deploying incentives to support local manufacturers, rather than to keep others out by way of tariffs. This should also incorporate policy support and assistance in establishing new markets for SA-produced goods.' She called for urgency on the side of the government. 'The government needs to move fast and take action in addressing barriers such as excessive red tape and complex policies associated with doing business in the country. Absolute urgency is required to improve the country's competitiveness versus other emerging locations, which have, over the years, become much more attractive investment destinations. 'These even include some countries on this continent who have surpassed South Africa in some key performance areas. Priority focus must be placed on ensuring that the basic enablers are in place, such as well-maintained infrastructure, efficient logistics and the delivery of basic services at a local municipal level, to help improve the competitiveness of local manufacturers and to sustain their continued operations in the Bay.' MEC warns Mercedes-Benz may exit Speaking at the Finance Committee in the Council of Provinces last week, Eastern Cape MEC for Finance Mlungisi Mvoko said they had held discussions with the Department of Trade, Industry and Competition (DTIC), as the matter significantly affected the Eastern Cape. He highlighted that Mercedes-Benz, currently exporting 90% of the vehicles it manufactures in East London to the United States, was facing the most risk. Mvoko warned that the company might consider withdrawing from South Africa due to the tariff changes. Mvoko said that if Mercedes-Benz were to leave, it would have devastating consequences for the East London Special Economic Zone (SEZ), where many companies existed solely to supply the vehicle maker. He also made it clear that thousands of families in East London and Qonce were reliant on Mercedes-Benz operations. DM
The Citizen
15-07-2025
- Automotive
- The Citizen
Devastating impact of US tariffs on SA automotive sector even before implementation
South Africa's automotive sector already reflects the devastating impact of the US tariffs and a socio-economic crisis in the making. The announcement and anticipation of the US tariffs already had a devastating and immediate impact on trade performance, even before the tariffs were implemented. Vehicle exports to the US dropped by 73% in the first quarter of 2025, followed by a further decline of 80% in April and 85% in May. Mikel Mabasa, CEO of the National Association of Automobile Manufacturers of South Africa (Naamsa), the Automotive Business Council, says this represents a risk of a direct loss of vehicle and component export volumes and annual export earnings, which would be difficult to recover in the short term. And it is not just the export volumes. Mabasa says this is not just a trade issue, but a socio-economic crisis in the making, as the US tariffs directly threaten thousands of jobs in the automotive sector, disrupt hard-won industrial capabilities, and risk devastating communities, such as East London, where the auto sector forms the economic heartbeat of the town. 'If we cannot retain export markets like the US, we risk turning vibrant industrial hubs into ghost towns.' Mabasa says in a press statement that Naamsa noted the official communication from US President Donald Trump to the South African government last week to notify the country of the unilateral 30% reciprocal trade tariff, as well as President Cyril Ramaphosa's formal response that confirmed South Africa's diplomatic and strategic approach to this matter. ALSO READ: How will the 25% US import tariff affect SA's auto industry? Automotive sector particularly vulnerable to 25% sectoral tariff 'South Africa's automotive sector is particularly vulnerable to the 25% sectoral tariff imposed under Section 232 of the US Trade Expansion Act of 1962, which specifically targets automotive exports. This escalation in trade tensions poses a serious threat to one of South Africa's most globally integrated and export-oriented industries.' He says the US has consistently been South Africa's second-largest trading partner and key export destination for vehicles manufactured in South Africa. Since the inception of the African Growth and Opportunity Act [Agoa], the automotive industry has benefited from substantial two-way trade and investment. In 2024, the auto sector accounted for 64% of all Agoa trade between South Africa and the US, generating R28.6 billion in export revenue, with 24 681 vehicles exported to the US under Agoa. The impact is also not on the sector itself, but also on original equipment manufacturers, value chains, and local economy. Mabasa says these tariff disruptions place major pressure on original equipment manufacturers [OEMs], who have long-standing industrial commitments with South Africa and invested significantly in local manufacturing, skills development and export infrastructure. 'The ripple effects of production loss due to disappearing export markets will be felt throughout the entire automotive value chain, from component manufacturers to logistics providers and across the thousands of workers and families who depend on the sector for their livelihoods. ALSO READ: BMW SA 'not exposed' to current US tariff uncertainty Finding new export partners will not happen overnight 'Export diversification and finding new markets is not something that can be achieved overnight. Our global competitors are already redirecting their exports into markets we traditionally serve. This intensifies the pressure on our OEMs, who must now absorb rising costs, reduce production and reconsider future investments.' He points out that the automotive sector is a cornerstone of the economy, contributing an impressive 22.6% to total domestic manufacturing output and directly supporting over 110 000 formal sector jobs. 'The tariffs – and the broader uncertainty in US-Africa trade relations – strike at the heart of South Africa's industrialisation agenda and threaten future investment in high-value manufacturing. They also undermine the significant progress made under Agoa to deepen US-Africa trade.' Mabasa emphasises that Naamsa welcomes government's continued diplomatic engagement with the US, including discussions held on the sidelines of the US-Africa Summit in Luanda in June and the submission of South Africa's Framework Deal in May to address the concerns raised by the US government. 'We urge both governments to accelerate negotiations toward a balanced, rules-based trade agreement. We are encouraged by early proposals for a quota of 40 000 duty-free vehicle units per year, which would allow us to retain our footprint in this key market. It is vital that we use this opportunity to preserve the business case for continued investment.' He says Naamsa continues to engage closely with government counterparts, providing data and strategic insights to support trade negotiations, and is also exploring additional export markets beyond the US urgently. ALSO READ: US tariff of 30% on SA exports: where to now? Time to prepare for more uncertain and competitive landscape in automotive sector Although Mabasa expresses optimism about diplomacy, he emphasises the need to prepare for a more uncertain and competitive global landscape. The US market remains crucial for South Africa, not only for trade flows but also for industrial stability and investor confidence. In addition, Mabasa points out that Naamsa is equally concerned about the impact of these developments on people's livelihoods. 'Behind every tariff statistic are real people – autoworkers, supply chain technicians, logistics operators and their families. Nowhere is this more visible than in East London, a community that has grown and thrived on the back of automotive exports. The erosion of this trade threatens to unravel decades of socio-economic progress. 'We urge all parties involved in the diplomatic negotiations to recognise the strategic and social importance of safeguarding mutually beneficial trade frameworks like Agoa and to avoid short-term decisions that carry long-term consequences for vulnerable regions. 'Naamsa remains deeply committed to South Africa's economic growth and industrial development, and we are optimistic that a constructive path forward will be reached through continued engagement and collaboration.'
The Citizen
04-07-2025
- Automotive
- The Citizen
Top 10 best-selling car brands in South Africa in June
Here's the breakdown of South Africa's best-selling car brands in June 2025. In May, the Automotive Business Council of South Africa (naamsa) reported that the fifth month of the year signified a turning point for the local automotive market. Taking a glance at the top 10 best-selling car brands in South Africa in June (see the list below), the momentum gained from May's new-car sales continued into June, with most of the country's top-selling automakers recording increases in sales. Toyota once again lead the sales charts, with the local arm of the Japanese automaker, in June, recording a 1 360 unit increase in overall sales over May. Suzuki and Volkswagen remained in second and third place, respectively. There were a few changes, though, with Ford surpassing Hyundai for fourth spot, while Kia, with 1 230 units sold, was relegated from 10th to 12th position. BMW Group and Renault (1 318 units) took the 10th and 11th spots, respectively. In addition to the aforementioned South Korean and French automakers, the manufacturers who missed out on the top 10 were Nissan (13th, with 1 183 units), Omoda and Jaecoo (14th, with 1 009 units) and Jetour (15th, with 683 units). South Africa's top 10 best-selling car brands in June Toyota — 11 690 units (up 1 360) Suzuki — 5 221 units (down 315) Volkswagen — 4973 units (up 391) Ford — 3 058 units (up 126) Hyundai — 2 905 units (up 346) GWM — 2 288 units (up 219) Chery — 2 101 units (up 106) Isuzu — 2 087 units (up 126) Mahindra — 1 483 units (up 41) BMW Group — 1 349 units An overview of South Africa's new car sales in June Aggregate new vehicle sales climbed to 47 294 units, an increase of 7 444 (or 18.7%) units compared with the same month in 2024. Of the total reported new car sales, an estimated 85.9% (40 621 units) represented dealer sales, with sales to the rental industry sales, corporate fleets and government accounting for 8.2%, 3.2% and 2.7% of the overall figure, respectively. Taking a closer look at the passenger and light commercial vehicle (LCV) segments, the former registered 32 570 new cars sold in June, a 21.7% increase compared with June 2024, while sales of LCVs, bakkies and mini-buses increased by 14.9%, to 12 129 units, in June. Said naamsa CEO Mikel Mabasa: 'The first half of 2025 has shown just how resilient and responsive our domestic market truly is. Strong consumer demand, supported by positive economic fundamentals, has helped the automotive sector deliver impressive growth amid global turbulence.' Click here to browse thousands of new and used vehicles here with CARmag! The post Top 10 Best-Selling Car Brands in South Africa — June 2025 appeared first on CAR Magazine. Breaking news at your fingertips… Follow Caxton Network News on Facebook and join our WhatsApp channel. Nuus wat saakmaak. Volg Caxton Netwerk-nuus op Facebook en sluit aan by ons WhatsApp-kanaal.
IOL News
02-07-2025
- Automotive
- IOL News
South Africa's automotive industry braces for potential US export tariffs
The Automobile Business Council (Naamsa) on Tuesday said vehicle exports increased by 2 647 units year-on-year to 36 343 units exported in June from the 33 696 units exported during the same month last year Image: Supplied South Africa's automotive industry has expressed anxiety about the potential impact of the impending export tariffs from the United States after vehicle exports rose by 7.9% in June, despite the growing toll of geopolitical and trade-related disruptions. The Automobile Business Council (Naamsa) on Tuesday said vehicle exports increased by 2 647 units year-on-year to 36 343 units exported in June from the 33 696 units exported during the same month last year. The automotive industry contributes 5.2% to South Africa's gross domestic product (GDP), 3.2% in manufacturing and 2.01% retail. In 2024, the export of vehicles and automotive components reached a record amount of R268.8 billion, equating to 14.7% of South Africa's total exports. Vehicles and components are exported to 155 international markets. However, Naamsa noted with anxiety that trade-related uncertainty looms large as the 90-day reciprocal trade reprieve extended by the US is scheduled to expire next week. Naamsa CEO Mikel Mabasa said that while the reprieve did not explicitly apply to Section 232 tariffs on automotive products, it formed part of the broader negotiation framework that will be critical in determining South Africa's continued preferential access to the US market. As such, Mabasa said ongoing engagement and negotiation over automotive exports will be vital to protect the sector's long-term trade position and export earnings. 'South Africa's automotive industry has long relied on a thriving export engine to sustain production volumes and attract investment,' Mabasa said. 'However, the current trade policy shifts, particularly from the United States, pose a real challenge to this model. To address this, our response must be strategic: diversifying markets, expanding regional trade, and continuing to advocate for fair and rules-based global trade systems.' According to data from Naamsa, the new vehicle sales demonstrated unwavering domestic momentum in the first half of 2025, closing this period strong. Aggregate new vehicle sales climbed once again by 18.7% or 7 444 to reach 47 294 units in June from the 39 850 units sold in June 2024 - reflecting a sustained and broad-based recovery in consumer and fleet demand. This was in line with Naamsa's earlier projection for a robust domestic performance in the first half of 2025. For the first half of the year new vehicle sales were now 13.6% ahead of the corresponding period 2024, supported by and large by an influx of affordable imported models. For the year-to-date [January to May 2025], Naamsa said new light vehicle imports by the Original Equipment Manufacturers (OEMs) increased by 25.6% and by the independent importers by 33.4% compared to the corresponding period 2024. Brandon Cohen, national chairperson of the National Automobile Dealers' Association, said the majority of the growth was centred in the sub-R400 000 segment. 'This price point remains critical for volume, affordability and trade-ins, with a direct knock-on effect on pre-owned sales performance. The used vehicle market is benefiting from improved affordability metrics, driven by softened interest rates, favourable vehicle pricing, and the rollout of the two-pot retirement savings reform,' Cohen said. The upbeat performance in domestic new vehicle sales builds on gains since the fourth quarter of 2024. Mabasa said this success was underpinned by a combination of favourable economic fundamentals. These include decreasing interest rates following the South African Reserve Bank's further 25 basis points cut in May, a still-benign inflation backdrop, and improved credit access across the market. 'The first half of 2025 has shown just how resilient and responsive our domestic market truly is. Strong consumer demand, supported by positive economic fundamentals, has helped the automotive sector deliver impressive growth amid global turbulence,' Mabasa said. However, the current market is only 1.5% ahead and 2024 volumes were 14% lower in the same month compared to June 2023.
