New automaker entrants must commit to full-scale manufacturing and substantial localisation for South Africa’s economy to benefit.
This is the stance of National Association of Automotive Component and Allied Manufacturers (Naacam) CEO Renai Moothilal, responding to questions around the promise of Chinese car companies setting up shop in South Africa.
Moothilal said the scale of benefit for the South African economy and supply chain hinges on completely knocked-down (CKD) production instead of semi knocked-down (SKD) assembly, in addition to prioritising the local component sector “where much of the employment opportunities and economic value addition sit”.
According to Moothilal, historic industry concerns regarding localisation stem from the recognition of China’s significant scale and excess capacity, meaning they often prioritise usage of their domestic suppliers, receiving components at extremely competitive prices due to economies of scale and state support.
He noted that local content levels by existing manufacturers have declined over the past two decades.
“South Africa has a diverse and robust component manufacturing base that is able to support the localisation plans of new original equipment manufacturers (OEMs),” he told Business Times, adding that the Automotive Production and Development Programme (APDP) is miscalibrated in its current guise.
“It over-incentivises vehicle assembly, with little incentive to localise, the OEMs trading of duty rebates to independent importers, which is undermining the domestic market for locally produced vehicles and doing nothing to grow local component usage.
“At the same time, SKD operations are benefiting from a duty preference; this is actively disincentivising investment in local production, requiring correction.”
He suggested that incentives and benefits for the motor industry be tied to local content requirements, citing Thailand and the EU markets, which have adopted similar policies.
South Africa has a diverse and robust component manufacturing base that is able to support the localisation plans of new original equipment manufacturers.
— Renai Moothilal, Naacam CEO
Great Wall Motors (GWM) is the latest Chinese firm to signal intent to produce locally.
Following reports of discussions with Mercedes-Benz to share its East London plant, COO Conrad Groenewald remained tight-lipped in response to queries.
Asked why South Africa would make an ideal location for building cars, Groenewald said GWM had no preferred region, but logistical feasibility was its main focus.
Regarding the competitive benefits of local production and suitability of the Mercedes-Benz plant, Groenewald said that all viable production plants were under consideration and that a business case was being studied.
He was unable to comment on which models from the range would be built domestically but said the more popular vehicles in the brand’s line-up would make the most sense.
In addition to the namesake brand, the GWM banner comprises the Haval, P-Series, Tank and Ora marques.
Its best-selling model is the Haval Jolion, of which 1,108 units were sold in February, making it the 11th top-seller in South Africa.
The Mercedes-Benz East London facility traces its origins to 1948. It currently produces the fifth-generation C-Class.
“Mercedes-Benz strives to ensure that all its production sites remain globally competitive, are on an optimal operating point and are adapted to new requirements whenever necessary,” the brand said in a statement, adding that it does not comment on speculation about its future production planning processes.
The brand has undergone leadership uncertainty in the last year, with co-CEOs Abey Kgotle and Claudius Steinhoff resigning.
Andreas Brand, who had tendered his resignation in 2025, is said to remain in position as CEO, while Alex Boavida, head of sales, currently serves in an acting capacity as the leader of the Mercedes-Benz cars division.
The department of trade, industry & competition (DTIC) declined to comment on the possibility of a facility-sharing agreement between GWM and Mercedes-Benz.
In 2025 Isuzu SA CEO and past president of automotive business council Naamsa, Billy Tom, mooted the idea of an opportunity for a shared plant among importers who did not yet have the volumes to justify independent production.
We revisited the topic with Tom in light of the possibilities around emerging Chinese producers.
“The principle I raised was really about improving asset utilisation across the South African automotive sector. We have world-class manufacturing infrastructure, but not all of it is always fully utilised.
“If there are credible partners who can bring sustainable volumes, then shared manufacturing — done correctly — can strengthen the overall ecosystem.”
Tom cautioned that successful partnerships depended on a high degree of trust and strategic fit between the parties, in addition to factors such as alignment on quality standards and brand positioning, as well as operational complexity.
“The risks are real and should not be underestimated — you are effectively introducing another brand into your operational environment, which can create complexity in production systems, supply chains and quality management.
“There is also a strategic consideration: you may be enabling a future competitor. Over time, that partner could build enough capability and scale to operate independently, so any agreement must be structured carefully, with clear boundaries and mutual benefit.
“Brand integrity is another important factor — legacy manufacturers have built reputations over decades, and any partnership must not compromise that.”
He said scale and cost competitiveness were among the biggest advantages for legacy and emerging brands to partner at the manufacturing level.
“New entrants, particularly from China, are coming in with strong product pipelines, competitive pricing, and increasing global ambition. For a legacy manufacturer, partnering can help improve job security in South Africa, plant utilisation, spread fixed costs and potentially create access to new technologies or platforms.”
Tom reiterated the broader industry benefit of supporting the supplier network’s job creation, localisation, and the long-term sustainability of the sector.
For Isuzu, the CEO said consideration of facility-sharing was not in its forecast.
