Latest news with #Moothilal
IOL News
5 days ago
- Automotive
- IOL News
Automotive industry braces for impact of Trump's proposed 30% tariffs on South Africa
The automotive industry raised concern about President Donald Trump's 30% tariff on South Africa that could come into effect in a few days' time. Image: supplied The South African automotive industry is reeling from the announcement of a potential 30% tariff on automotive exports to the United States, expected to take effect in the coming days. This move by President Donald Trump has sparked warnings from the Department of Trade, Industry and Competition of up to 30 000 job losses, with industry leaders voicing deep concerns over the implications for the nation's economy. Renai Moothilal, the CEO and Executive Director of the National Association of Automotive Component and Allied Manufacturers (Naacam), on Monday said that they were deeply concerned about the potential impact on South African automotive exports to the US. 'In 2024, South Africa exported R28.7 billion worth of automotive products to the US, of which R4.4 billion was attributable to automotive components,' Moothilal said. 'The US ranked as the country's third-largest export destination for automotive goods, following Germany and Belgium. This accounted for 10.7% of South Africa's total automotive exports, significantly supporting jobs, industrial output, and the country's trade balance.' Moothilal added that only about one third of South African automotive component exports to the US were affected under Section 232 measures, but with the latest tariff expansion, 100% of these exports are now impacted. 'The impact will be felt across the entire value chain. Direct component exporters to the US are likely to see reduced demand as buyers shift to more cost-effective sources,' he said. 'In addition, suppliers within South Africa who support domestic Original Equipment Manufacturers that export vehicles or integrated systems to the US may face volume reductions, putting pressure on production planning, employment, and investment decisions.' Moothilal said that the imposition of tariffs would directly increase the landed cost of South African vehicles and components in the US market. 'This would make them less competitive compared to products from countries that continue to benefit from preferential or zero-duty access, such as those under the USMCA (United States-Mexico-Canada Agreement). Overall, such tariffs threaten to disrupt well-established trade flows and weaken the global competitiveness of South Africa's automotive manufacturing ecosystem.' Moothilal added that policy cushioning for component manufacturers impacted by the developments in the US was needed to assist the sector and protect its significant economic contribution. Dr Eliphas Ndou, an economist and author at Unisa's Department of Economics, said that the imposition of 30% tariffs will reduce volumes of South Africa's automotive sector's exports to the US. 'The large decline in car exports to the US reported by the Automotive Business Council in the first half of 2025, compared to the same period last year, suggests the contribution of the automotive sector to GDP this year will fall below the level reached in 2024,' he said. Ndou added that, in addition, the economic cost includes the direct loss of employment from the sector, reduced contribution of personal income tax from this sector to total tax revenue, and loss of jobs and tax revenue from supplier networks. Waldo Krugell, a Professor of Economics at North-West University, said that the major automotive exports to the US were BMW X3s and Mercedes C-class, and with the 30% tariff, they will be priced out of the market. 'We know that Mercedes has already suspended C-class production. This is already having a major impact on component suppliers. They cannot easily pivot to new markets because they are supplying a tailor-made product into a global supply chain,' Krugell said. He added that the resulting production losses and job losses will be concentrated in the communities where the production takes place, which means East London specifically will be hard hit. Khulekani Mathe, Business Unity South Africa CEO, said the impact on local industries was substantial. 'In the automotive sector, where exports to the US total approximately R24.1 billion, the exposure to tariffs will be monumental. The sector is currently facing 25% Section 232 tariffs, and the proposed 30% increase could raise total duties to 55%, rendering exports uncompetitive,' Mathe said. 'Approximately 20 000 jobs are at risk in this sector, affecting both OEMs and component manufacturers due to the new tariffs.' BUSINESS REPORT
TimesLIVE
30-07-2025
- Automotive
- TimesLIVE
Naacam Show to be held at Gqeberha automotive hub for first time
It showcases the South African automotive component manufacturing sector and explores global developments influencing the future of the motor industry. The exhibition will have more than 130 exhibitors and incorporates a two-day conference with international and local speakers. With more than 1,200 visitors expected, the Naacam Show brings together a diverse group of automotive component manufacturers, sector stakeholders and service providers, said Naacam CEO Renai Moothilal. 'The decision to host this event in Nelson Mandela Bay (NMB) was made due to the city being regarded an important hub of South Africa's automotive manufacturing sector,' said Moothilal. 'The NMB metro is home to 42% of our members and more than half of the automotive original-equipment manufacturers in South Africa. It makes sense to celebrate this industry in the province that derives a substantial economic benefit from it in job creation, skills and technology transfer and related services.' The conference will address topics shaping the future of a rapidly evolving automotive industry, ranging from global trade, component design, supplier requirements and aftermarket development to sustainability, mineral beneficiation, transformation and skills development in a digitised era.
IOL News
13-07-2025
- Automotive
- IOL News
Automotive sector struggles with declining production and sales amid economic concerns
National Association of Automotive Component and Allied Manufacturers (NAACAM) have raised concern about the negative contribution of the automotive sector indicated during the Stats SA release of Manufacturing Production and Sales May 2025 on Thursday. Image: Costfoto / NurPhoto via AFP. The National Association of Automotive Component and Allied Manufacturers (NAACAM) has voiced serious concerns regarding the automotive sector's negative performance, highlighted in the recent manufacturing production and sales report released by Statistics SA for May. Although the broader manufacturing landscape showed a modest increase of 0.5% compared to May 2024, the automotive segment—specifically motor vehicles, parts and accessories, and other transport equipment—recorded a stark contraction of 6.7%, contributing negatively to the overall figures with a loss of 0.6 percentage points. Stats SA indicated that this decline in the automotive sector reflects more than just temporary fluctuations, as it is compounded by a mixture of enduring challenges that have plagued the industry. Renai Moothilal, CEO of NAACAM, said that the decline in production within the automotive sector during May was attributed to a combination of factors. 'These include disruptions in export demand, particularly from key trading partners such as the United States, where recent tariff measures have begun to weigh on order volumes,' Moothilal said on Friday. 'Persistent challenges related to logistics inefficiencies, global demand and input cost pressures also continue to affect output levels.' Moothilal added that NAACAM has always been an advocate of continued and inclusive growth within the South African automotive sector. He said this included growth that deepens local value addition, expands supplier participation, and drives employment creation. 'While the current data reflects pockets of resilience, it also highlights vulnerabilities that must be addressed through collaborative efforts between industry stakeholders and government, particularly around assembly volumes, trade access, infrastructure reliability, and localisation plus employment support in the supplier base.' Moothilal said that the fact that the motor vehicles, parts, and accessories division recorded a 3.9% increase in sales and contributed positively to overall manufacturing performance was an encouraging sign. 'It demonstrates that, despite production challenges, the sector continues to show resilience driven largely by robust aftermarket demand, growth in export markets outside the USA, and continued investment in high performing model lines,' he said. 'However, sustained growth will depend on improving operating conditions, maintaining competitiveness, and suitably adjusted policy, in light of shifting global trade dynamics.' Earlier this month, the Automobile Business Council (Naamsa) said that South African new vehicle sales demonstrated unwavering domestic momentum in the first half of 2025, closing this period strong. Aggregate new vehicle sales climbed to reach 47 294 units in June, up 7 444, or 18.7%, from the 39 850 units sold the same month a year ago, reflecting a sustained and broad-based recovery in consumer and fleet demand. Naamsa CEO Mikel Mabasa said that strong consumer demand, supported by positive economic fundamentals, helped the automotive sector deliver impressive growth amid global turbulence. 'At Naamsa, we recognise this momentum as a reflection of supportive macro-economic policy choices and a highly adaptive industry,' Mabasa said. 'As 2025 marks a critical inflection point for the sector, we look forward to progressive policy support measures as part of the South African Automotive Masterplan 2035 Review that sustains this growth trajectory, enhances competitiveness, and drives deeper inclusion across the value chain.' Efficient Group economist Dawie Roodt said that these numbers were not good news for South Africa. 'I think chances are very good that the South African economy could already be in a recession, or could be heading for a recession, but very, at the very least, very weak economic growth,' Roodt said. 'And on top of that, if you add things like tariffs and uncertainty and things like that, I'm afraid this is not going to be a good year for the South African economy.' BUSINESS REPORT
IOL News
23-04-2025
- Automotive
- IOL News
South Africa's automotive industry on edge as Agoa renewal uncertainty grows
Experts and the automotive industry believe that the African Growth and Opportunity Act (AGOA) will not be renewed and believe that South Africa should look at other markets to support the auto industry. As the African Growth and Opportunity Act (Agoa) faces uncertainty over its renewal in September, South Africa's automotive industry is bracing for turbulence, with experts on Tuesday warning of significant repercussions if the preferential trade programme is allowed to expire. The Agoahas been a cornerstone for the country's automotive sector, providing duty-free access to the lucrative United States market. Without it, the local automobile landscape could face dire consequences. Renai Moothilal, CEO of the National Association of Automotive Component and Allied Manufacturers (Naacam), stressed the critical role that Agoa has played in not just boosting export growth, but also attracting vital investments into South Africa's automotive sector over the past two decades. 'Agoa provides South African automotive component and vehicle manufacturers with preferential, duty-free access to the US market. This has not only supported export growth but also contributed to attracting investment into the sector,' Moothilal said. In 2024, South Africa exported an impressive R24 billion worth of vehicles and R4.3bn in components to the US, affirming the nation's position as the second-largest exporter of automotive components after Germany. This trade relationship is not merely transactional; it is vital for job creation and economic stability in a country grappling with high unemployment rates. 'The benefits of Agoa are not just sectoral; they extend across the economy through export growth, employment, industrial diversification, and regional development,' Moothilal said. 'Losing Agoa would create headwinds at a time when the country and its partner countries on the African continent need to solidify their industrial base and promote value-added exports.' Professor Raymond Parsons, an economist at the North-West University (NWU) Business School, echoed these sentiments, arguing that the likely non-renewal of Agoa indicated challenges extending beyond just the automotive industry. He cautioned that South Africa must immediately explore new and existing international alliances to pivot towards alternative markets. 'Economic negotiations with America will also need to be recalibrated and stabilised. New trade negotiations with America may yield some possible new agreements or compromises,' Parsons said. 'But the future of the automotive sector will also depend on SA as a whole now developing a different mindset and strategic thrust about how its overall economy can be more competitive in alternative markets, including within Africa.' Dr Noluthando Phungula, an international relations expert from the University of KwaZulu-Natal, said that the loss of Agoa was sure to reshape South Africa's trade dynamics, adding that the automobile industry was going to be impacted. Phungula said the industry has been already seeing a shift away from global giants towards Chinese manufactured vehicles. 'This is evidenced by the major closing down of many of these global brands throughout South Africa. This shift may offer new opportunities for South Africa's automotive industry,' she said. Waldo Krugell, an economics professor at the North-West University, said South Africa's auto exports could face a 25% tariff into the US independent of Agoa. 'It will also apply to components. This is true for all exporters to the US, so it is not only our loss of price competitiveness. The impact will be on everyone when demand in the US falls. Americans will simply buy fewer of the more expensive cars,' Krugell said. 'The exporters of completed cars can try to sell in other markets, but component manufacturers will struggle. They are producing components that are made to be part of a very specific value chain, and if those orders decrease, no one else wants that transmission or dashboard or leather seat or whatever.' BUSINESS REPORT
