Latest news with #NationalAssociationofAutomotiveComponentandAlliedManufacturers
Daily Maverick
21-05-2025
- Automotive
- Daily Maverick
SA auto component manufacturers roll back production after crippling Trump tariffs
South African automotive component manufacturers are scaling down production in the face of sky-high tariffs imposed by US President Donald Trump, the National Association of Automotive Component and Allied Manufacturers said on Tuesday ahead of President Cyril Ramaphosa's crucial meeting with Trump. The CEO of the National Association of Automotive Component and Allied Manufacturers (Nacaam), Renai Moothilal, said they were extremely concerned that automotive component manufacturing in SA had slowed down significantly since the imposition of tariffs on South Africa by US President Donald Trump earlier this year. It is unclear at this stage how the 30% tariff base rate imposed on South Africa would relate to the generic 25% tariffs on foreign cars and parts. If it is more than 25%, South African automotive and component manufacturers will face an even bigger cost disadvantage than other countries. advertisement Don't want to see this? Remove ads Moothilal said Nacaam members that exported to the US were continuing to service those contracts. 'It will typically take nothing less than 12 months for such safety-critical parts to be substituted. The concern has come in where we have seen local component manufacturers who have products going into the US, already starting to reduce production. That impacts the entire supplier base, not just those exporting,' he said. The Department of Trade, Industry and Competition had been very proactive and regularly engaged with Naacam to help develop positions and info packs to aid those responsible for negotiating reduced tariffs, he said. 'A key point is that in the component tariff lines, the US holds a trade surplus relative to South Africa.' He said the priority for component manufacturers would be to find a way to stabilise the political relationship with the US and seek a mutually beneficial arrangement that preserved South Africa as a preferred exporter into the US. advertisement Don't want to see this? Remove ads 'Not just short term, but to some extent look for a continuation of Agoa [the African Growth and Opportunity Act], which has proven to benefit South Africa, wider African markets and jobs in the USA as well. 'There are a multitude of component investors from the USA located in SA, and we would not want to see a situation where this changes,' he added. President Cyril Ramaphosa is due to meet Trump at the White House in Washington on Wednesday, 21 May. He will be accompanied by International Relations and Cooperation Minister Ronald Lamola, Minister in the Presidency Khumbudzo Ntshavheni, Trade, Industry and Competition Minister Parks Tau, Agriculture Minister John Steenhuisen and Special Envoy to the US Mcebisi Jonas. Last week, Mikel Mabasa from Naamsa | The Automotive Business Council, said: 'Unlike past crises, the long-term implications of these tariffs are unclear, complicating production planning and investment decisions that typically stretch years ahead. 'Trade agreements remain essential for South Africa as they create a framework that facilitates smoother, more cost-effective and competitive trade between countries.' DM
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
