German automaker Mercedes-Benz is considering sharing its vehicle manufacturing plant in South Africa with Chinese carmaker Great Wall Motor, according to a report by Bloomberg citing people familiar with the matter.
The companies are reportedly discussing a co-manufacturing arrangement at Mercedes-Benz’s facility in East London. As part of the discussions, representatives from Great Wall Motor have presented a production proposal to senior officials at the South African Department of Trade, Industry and Competition outlining the company’s interest in producing vehicles locally.
A final agreement has not yet been reached, and the companies could also pursue alternative partnership structures, according to the report.
Mercedes-Benz is also evaluating the possibility of turning the East London facility into a global hub for repurposing end-of-life batteries from passenger vehicles, one of the people familiar with the discussions said.
The plant has historically exported vehicles to the United States under duty-free conditions since 1997 through a trade arrangement. However, the economic viability of those exports could be affected by the U.S. administration’s plan to introduce a 15% global tariff on imported vehicles, Bloomberg reported.
Sharing the factory, which employs about 2,400 workers, could help reduce excess production capacity and lower operating costs while maintaining employment as established automakers face growing competition from lower-cost imports.
At the same time, the Government of South Africa is considering new tariffs of up to 50% on vehicles imported from China and India in response to rising import volumes that policymakers say are affecting domestic manufacturing.
For Great Wall Motor, establishing local production in South Africa could provide a way to bypass potential tariffs while meeting increasing demand in the market, where Chinese brands have recorded strong sales growth in recent years.
The discussions also reflect broader changes within South Africa’s automotive sector. Earlier this year, Chinese automaker Chery agreed to acquire production assets from Nissan at the Rosslyn plant in Pretoria.
Over the past four years, vehicle imports from China into South Africa have increased by 368%, highlighting the growing presence of Chinese automakers in the country’s entry-level vehicle segment.