Mercedes-Benz Group AG is purportedly considering letting Chinese manufacturer Great Wall Motor Co. use its vehicle production facility in South Africa, which might help maintain the business fiscally viable as new US trade tariffs threaten export economics.
According to those close to the negotiations, the two businesses are looking into the possibility of jointly producing automobiles at the Mercedes site in the port city of East London, South Africa.
The sources that asked to remain anonymous also revealed that the negotiations are still ongoing and confidential.
As part of the process, representatives of Great Wall Motor reportedly presented a proposal to officials at the South African Department of Trade, Industry, and Competition describing the company’s desire to commence car manufacture at the site.
According to a statement from Mercedes-Benz’s South African branch, the company is constantly reviewing ways to keep its worldwide manufacturing network competitive and adaptable to changing market conditions.
“Mercedes-Benz strives to ensure that all its production sites remain globally competitive, are on an optimal operating point and adapted to new requirements whenever necessary,” its South African unit said, declining to comment further.
The corporation did not respond directly to the purported discussions.
Meanwhile, Great Wall Motor’s local unit stated that it consistently looks into the potential to expand its presence in South Africa on a regular basis, but declined to provide any information.
People familiar with the matter stressed that no definitive agreement had been made and that the corporations could yet pursue alternative partnership models.
One option under consideration is to use the plant as a global hub for processing and repurposing spent batteries from passenger vehicles as they approach the end of their life cycle.
Mercedes in South Africa
Since 1997, Mercedes has utilized the African Growth and Opportunity Act, which permits duty-free automobile exports to the world’s largest economy, to ship the C-Class sedan from its South African facility to the United States.
In 2022, the German automaker modernized the facility for an approximate investment of €600 million ($694 million), Bloomberg reports.
As established manufacturers from Europe, the US, and Japan experience a decline in market share due to competition from more affordable imports originating in China and India, a prospective contract to share the facility, which currently employs approximately 2,400 individuals, could mitigate overcapacity, reduce operational costs, and preserve employment.
Two decades ago, 56% of vehicles sold in South Africa were domestically produced; currently, this figure stands at only one in three.
Automakers, notably a local subsidiary of Volkswagen AG, have urged the government to implement enhanced tax incentives to safeguard the sector against an influx of exports.
