- Representatives for GWM have presented a production proposal to South African officials, outlining the company's interest in producing vehicles in the country.
- The potential move follows Chery's recent agreement to acquire a Nissan production facility in the country.
Mercedes-Benz is considering sharing its manufacturing plant in South Africa with GWM, a move that could boost the facility's profitability as US trade tariffs take effect, Bloomberg reported Monday, citing people familiar with the matter.
Mercedes is in talks with the Chinese automaker about co-manufacturing at the factory in the port city of East London. Representatives for GWM have presented a production proposal to senior officials at South Africa's trade department, outlining the company's interest in producing vehicles there, according to the report.
A final agreement hasn't been reached, and the two companies could structure alternative tie-ups.
Mercedes-Benz is also considering using the plant as a global hub to repurpose end-of-life batteries from passenger vehicles, one of the people said, according to Bloomberg.
Mercedes has shipped cars duty-free from South Africa to the US since 1997, taking advantage of a trade act. However, the US administration's plan to impose a 15% global tariff starting this month threatens the economics of the plant, the report noted.
Sharing the factory, which employs about 2,400 people, could reduce overcapacity and lower operating costs. It could also preserve jobs as established manufacturers lose market share to cheaper imports.
Meanwhile, South Africa is considering imposing tariffs of up to 50% on vehicles from China and India. Policymakers said the surge in imports is hurting local manufacturing, according to a Bloomberg report in late January.
For GWM, local production facilities would help bypass these tariffs and meet growing demand. The Chinese brand has already seen strong sales growth for its products in the South African market.
The potential deal highlights a broader shift taking place in South Africa's auto industry landscape. In January, another Chinese auto giant Chery agreed to acquire Japanese automaker Nissan's production assets in Rosslyn, Pretoria.
Over the past four years, the number of cars South Africa imports from China has surged 368%. Chinese auto brands are showing increasing market appeal in the African nation's entry-level segment.
