{"id":838154,"date":"2025-09-22T17:30:00","date_gmt":"2025-09-22T15:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=838154"},"modified":"2025-09-22T16:25:37","modified_gmt":"2025-09-22T14:25:37","slug":"another-major-city-at-risk-of-becoming-a-ghost-town-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/838154\/another-major-city-at-risk-of-becoming-a-ghost-town-in-south-africa\/","title":{"rendered":"Another major city at risk of becoming a ghost town in South Africa"},"content":{"rendered":"\n

East London, one of South Africa\u2019s oldest industrial hubs, is facing a real risk of turning into a ghost town if Mercedes-Benz South Africa (MBSA) decides to scale back or shut down its local operations.<\/p>\n\n\n\n

This warning came from Mikel Mabasa, CEO of the automotive business council Naamsa, who said<\/a> the city could turn into a ghost town if the plant stops running.\u00a0<\/p>\n\n\n\n

\u201cEast London could potentially face the burden of being classified as a ghost town if the Mercedes-Benz plant, an anchor of that local economy, comes to a grinding halt,\u201d he said at a recent industry conference in Sandton.<\/p>\n\n\n\n

The problem comes down to trade with the United States, South Africa\u2019s second-largest export market for vehicles. <\/p>\n\n\n\n

For years, Mercedes-Benz has been exporting its C-Class sedan from East London to the US under the African Growth and Opportunity Act (AGOA), which scrapped import duties for African-made cars. <\/p>\n\n\n\n

However, this arrangement collapsed when the Trump administration imposed a 30% tariff on South African imports. <\/p>\n\n\n\n

Overnight, the East London factory\u2019s main business model was shaken, as the higher tariffs made the cars far less competitive.<\/p>\n\n\n\n

The consequences are already visible. Vehicle exports from South Africa to the US dropped 82% in the first half of 2025 compared to last year.<\/p>\n\n\n\n

In August alone, exports of Mercedes-Benz passenger cars fell by almost half. Nearly all of these cars were C-Class sedans built in East London, showing how exposed the plant is to US trade policy.<\/p>\n\n\n\n

Mercedes-Benz is now weighing its options. Closing the factory is possible, but it would be a drastic step, especially after the company spent about \u20ac600 million in 2022 to modernise the facility.<\/p>\n\n\n\n

The plant employs 2,400 people and produced 70,000 cars in 2024, with MBSA and its suppliers contributing around 25% of East London\u2019s economy. <\/p>\n\n\n\n

One alternative being considered is bringing in another carmaker<\/a> to share the facility. The existing production line could handle another brand, but this would still require big investments.<\/p>\n\n\n\n

For now, Mercedes-Benz has said no final decision has been made and that it regularly reviews its plant network.<\/p>\n\n\n\n

Optimistic that South Africa and the US will strike a trade deal<\/h2>\n\n\n\n
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Global shifts in the company\u2019s strategy are also putting East London at risk. The C-Class is not as profitable as Mercedes\u2019 luxury sedans and SUVs, many of which are made in Europe and the US.<\/p>\n\n\n\n

On top of that, the company already produces large SUVs in Alabama and has moved production of its popular GLC to the US, further reducing the need for South African exports.<\/p>\n\n\n\n

Adding to the pressure, Mercedes sales in North America fell 12% in the second quarter of 2025, contributing to a global sales decline of 9%.<\/p>\n\n\n\n

Acting Eastern Cape Premier Mlungisi Mvoko has previously said<\/a> losing the plant would be devastating.\u00a0<\/p>\n\n\n\n

\u201cYou cannot imagine East London without Mercedes-Benz. MBSA exports almost 90% of their cars to the US. In our interaction with them, they said that, given these tariffs, it would be difficult,\u201d he said.<\/p>\n\n\n\n

The East London factory has been operating since 1962 and is one of the few plants worldwide trusted to build the luxury C-Class for export. <\/p>\n\n\n\n

It has long been central to the city\u2019s economy and identity. Without it, thousands of jobs and businesses tied to the automotive supply chain could disappear.<\/p>\n\n\n\n

Mabasa urged that negotiations between South Africa and the US are urgently needed to reduce the impact of tariffs. <\/p>\n\n\n\n

\u201cWe remain hopeful that a deal between the US and South Africa can still be negotiated to cushion and help insulate the impact of the tariff increase on the livelihoods of towns like East London,\u201d he said.<\/p>\n\n\n\n

Minister of Trade, Industry and Competition Parks Tau met US Trade Representative (USTR) Jamieson Greer and members of Congress in Washington last week following \u201cintensive\u201d three-day discussions by senior officials, his office said on Friday, 19 September. <\/p>\n\n\n\n

The Department of Trade, Industry and Competition (DTIC) said the minister held a \u201ccordial and constructive meeting\u201d with Greer on \u201cmatters of mutual interest\u201d.<\/p>\n\n\n\n

Tau says he is cautiously optimistic that South Africa and the US will strike a trade deal, more than a month after US President Donald Trump imposed 30% tariffs on South African exports. <\/p>\n\n\n\n

\u201cIn the nature of negotiations, these are tough discussions, so it\u2019s very difficult to anticipate what the outcome would be,\u201d he told<\/a> Daily Maverick on Sunday, 21 September.<\/p>\n\n\n\n

\u201cBut I am optimistic because there\u2019s a sense that we\u2019d want to [reach] an agreement, that we\u2019d want to find each other, and that, I think, is a very good starting point.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

One of South Africa\u2019s oldest industrial hubs risks turning into a ghost town if Mercedes-Benz South Africa (MBSA) decides to scale back or shut down its local operations.<\/p>\n","protected":false},"author":92,"featured_media":833573,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[23260,21766,10421,853],"class_list":["post-838154","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-east-london","tag-mercedes-benz-2","tag-naamsa","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=838154"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838154\/revisions"}],"predecessor-version":[{"id":838164,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/838154\/revisions\/838164"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/833573"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=838154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=838154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=838154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}