Mercedes-Benz East London plant faces closure amid South African automotive uncertainty

Reports of potential factory closure contrast with Mahindra expansion plans as sector records highest sales growth in two decades.

South Africa's automotive industry faces divergent signals as reports emerged this week of a potential closure of the Mercedes-Benz South Africa East London plant, following a scheduled temporary production suspension last year.¹² The reports contrasted with separate indications that Mahindra & Mahindra is at an advanced stage of assessing plans to upgrade its South African plant.¹²

The conflicting developments come as the sector accounts for 7% of South Africa's GDP and more than 17% of manufacturing output, directly employing more than 115,000 people.¹²

New vehicle sales recorded 17.3% year-on-year growth last month, the highest level in nearly two decades.¹² Most vehicles sold recently cost less than R500,000, reflecting price-sensitive consumer behaviour and favourable responses to affordable car brands entering the market.¹²

Naamsa chief executive Mikel Mabasa said the industry's value chain extends beyond dealerships to mining, component manufacturing and logistics.¹² The statement suggested that retail sales growth does not automatically translate into broader automotive sector strength.¹²