Potential co-manufacturing plan under discussion
Mercedes-Benz Group is exploring the possibility of sharing its vehicle manufacturing facility in South Africa with Chinese automaker Great Wall Motor (GWM), according to people familiar with the discussions.
The talks involve Mercedes’ long-standing assembly plant in the coastal city of East London, one of South Africa’s most significant automotive production sites. If finalised, the arrangement could allow both companies to manufacture vehicles at the same facility, helping improve efficiency and reduce unused capacity.
The discussions remain preliminary and no agreement has been reached. However, representatives from Great Wall Motor have already presented a proposal to officials at South Africa’s Department of Trade, Industry and Competition outlining the company’s interest in establishing production operations at the site.
Mercedes-Benz South Africa confirmed that it regularly evaluates ways to maintain the competitiveness of its global production network but declined to comment on specific negotiations.
“Mercedes-Benz strives to ensure that all its production sites remain globally competitive and adapted to new requirements whenever necessary,” the company said in a statement.
GWM South Africa also indicated that it continues to assess opportunities to expand its footprint in the local automotive market, though it provided no further details.
Trade pressures and industry changes
The East London factory has played a crucial role in Mercedes-Benz’s global supply chain for decades. Since 1997, the plant has produced the C-Class sedan for export to the United States, benefiting from duty-free access under the African Growth and Opportunity Act (AGOA).
Recent changes in US trade policy, however, have created uncertainty for the export-driven operation. In August 2025, the administration of US President Donald Trump imposed a 30 percent tariff on goods imported from South Africa, threatening the profitability of exports from the facility.
Although the US Supreme Court suspended the measure in February 2026, the US government is planning to introduce a 15 percent global tariff on imports entering the American market.
These developments have prompted manufacturers to reconsider production strategies and seek new ways to maintain efficiency and protect jobs.
Mercedes invested approximately €600 million to modernise the East London plant in 2022, upgrading its production technology and manufacturing capabilities. The facility currently employs around 2,400 workers and remains one of the largest automotive employers in the region.
Allowing another automaker to produce vehicles at the plant could help reduce excess capacity and lower operating costs. Similar arrangements exist in other parts of the global automotive industry, where factory owners manufacture vehicles for partner brands and charge production fees.
Under such a model, Mercedes’ existing assembly line could potentially accommodate another brand. However, the partner manufacturer would likely need to establish its own body shop within the facility to handle welding, structural assembly and vehicle preparation before painting.
Growing presence of Chinese automakers
For Great Wall Motor, local production in South Africa could support the growing popularity of its vehicles in the country. The Chinese manufacturer already sells several models in the South African market, including those under its Haval and Tank brands.
South Africa has increasingly become a strategic market for international automakers seeking a gateway to the broader African continent.
At the same time, the country’s domestic automotive sector has faced mounting pressure from imported vehicles. Today, only about one-third of cars sold in South Africa are manufactured locally, compared with around 56 percent two decades ago.
Automakers operating in the country, including a local subsidiary of Volkswagen, have called on the government to strengthen support for domestic manufacturing, including improved tax incentives to counter rising imports.
Industry analysts say partnerships between established manufacturers and newer entrants could become more common as companies adapt to shifting global trade conditions and increased competition in emerging markets.
Source: Bloomberg
