The Eastern Cape’s automotive sector — anchored in the Buffalo City Metro by Mercedes-Benz SA — is facing mounting pressure from failing infrastructure, unreliable basic services and growing global competition, prompting MPs to step in.
A week-long oversight visit by parliament’s portfolio committee on trade, industry and competition to key industrial hubs in KuGompo City and Gqeberha laid bare the extent of the challenges, with industry players warning of job losses, reduced production shifts and increasing uncertainty.
MPs visited Mercedes-Benz SA, Isuzu Motors and Volkswagen, as well as the Coega Special Economic Zone (SEZ), the East London Industrial Development Zone (ELIDZ) and the Automotive Industry Development Centre in Gqeberha and Kariega.
Though the committee’s engagement with Mercedes-Benz SA was initially scheduled as an open session, media were excluded, with company spokesperson Thato Mntambo citing sensitive information in the presentation.
Committee chair and ANC MP Mzwandile Masina told the Dispatch that while the automotive sector played a critical role in the Eastern Cape economy, its long-term sustainability could not be taken for granted.
He said reliable infrastructure, stable basic services and policy certainty were essential to ensuring the sector’s continued contribution to growth and employment.
“The Eastern Cape remains an important hub for South Africa’s automotive sector; however, industry stakeholders warned the committee that the sector is under growing pressure,” Masina said.
He said the concerns raised included unreliable electricity and water supply, inefficiencies in road, rail and port logistics and uncertainty around policy frameworks.
Masina said some companies had already been forced to adjust their operations.
“Some have had to readjust their strategies, including reducing the shifts,” he said.
The provision of stable electricity, stable water supply and so on, has become a critical issue
— Mzwandile Masina, committee chair
Industry players also raised concerns about increased competition from cheaper imported vehicles, as well as a growing trend of manufacturers importing pre-assembled components rather than sourcing parts locally.
“This trend threatens local manufacturers and could weaken the domestic supply chain,” Masina said.
He added that there were also calls for urgent policy certainty on electric vehicles, warning that delays could affect investment decisions.
“Without clear direction, manufacturers may delay or forego critical investments in new technologies, putting local production, jobs and export markets at risk,” he said.
Service delivery failures were also identified as a major constraint.
“The provision of stable electricity, stable water supply and so on, has become a critical issue,” Masina said.
He said the committee would engage the Buffalo City and Nelson Mandela Bay metros to address the concerns.
Masina said industry players had also pointed to inefficiencies in transport infrastructure.
“The issue of the facilities such as the road, rail and ports, which is the network infrastructure, has been sharply raised by all the players that we don’t seem to be very efficient.
“So we’ll be engaging with our transport department as it relates to that, to ensure that we can get our act together, and ensure that the local ports are effective,” he said.
He said the committee would compile a report to parliament after the visit, outlining areas requiring legislative and policy intervention.
“We have to ensure that where we must intervene in terms of legislation, we are able to do so, where we must intervene in terms of intergovernmental issues, we are able to do so.”
Masina said global pressures, including US tariffs, were also affecting the sector.
“It is a very difficult period, of course. But as you know, the government has really paid special attention to this sector.
“We need to look at the support levers and ensure that we don’t suffocate the auto sector, because it plays a very important role in South Africa.
“We also have to look at other strategies, including how to ensure that they broaden their markets to the greater African market, just beyond our borders here in South Africa,” he said.
East London Industrial Development Zone chief operations officer Ayanda Ramncwana said the parliamentary visit had provided an opportunity to reflect on the zone’s performance.
“We were deeply encouraged by the committee’s feedback, describing ELIDZ as resilient, with a can-do attitude, always seeking new ways to grow the economy,” he said.
“The engagement also allowed us to garner support for the critical enablers of growth and competitiveness that SEZs require to continue driving industrial transformation and inclusive development.”
International Trade Administration Commission of SA commissioner Ayabonga Cawe, who accompanied the delegation, said the sector was facing increasing pressure from global dynamics.
“From our reading, some of the challenges faced by the sector include intensified import competition and overcapacity in the sector,” he said.
Daily Dispatch
Asanda Nini
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