US Trade Tariffs Present Significant Export Challenges

Automechanika Johannesburg successfully hosted its final CEO Breakfast for 2025 at the Kyalami Grand Prix Circuit, bringing together senior automotive industry leaders for strategic discussions as the co-located Festival of Motoring roared into life

The breakfast event featured keynote presentations from four distinguished industry experts addressing critical challenges and opportunities facing South Africa’s automotive sector.

Victor Radebe, Chief Director of the Programme Management Office of the Premier for Gauteng Provincial Government, opened proceedings, setting the stage for high-level industry dialogue on transformation and resilience.

Rental and Leasing Sector Drives Mobility Innovation

Sandile Ntseoane, General Manager of the Southern African Vehicle Rental and Leasing Association (SAVRALA), highlighted the rental and leasing industry’s role as the “unseen engine of mobility” in South Africa.

He emphasised how the sector has stabilised after pandemic-related declines, with fleet sizes recovering and rental demand strengthening through tourism recovery. Ntseoane outlined key transformations, including cautious experimentation with electric vehicles, evolving customer needs driving shorter lease arrangements, and technology revolutionising fleet management through telematics and AI.

US Trade Tariffs Present Significant Export Challenges

Duane Newman, Partner at EY South Africa, delivered a comprehensive analysis of US trade policies’ impact on the automotive sector.

Newman explained how the Trump administration’s tariff strategy, including 25% duties on automotive products and 50% on steel and aluminium content, creates significant challenges for South African exporters. Potential revenue losses of $1.4-$1.6 billion could result annually, with job losses of 50,000-100,000 possible across the economy.

Newman recommended local companies focus on regulatory monitoring, supply chain optimisation, pricing strategies, and technology partnerships to navigate this challenging environment.

Aftermarket Service Guidelines Foster Healthy Competition, Brandon Cohen, National Chairperson of the National Automobile Dealers’ Association (NADA), provided insights into South Africa’s automotive aftermarket service guidelines implementation.

Cohen said the guidelines opened the previously closed warranty service market, enabling healthy competition between independent providers and franchise dealers without voiding warranties. This benefits consumers through increased choice while surprisingly boosting dealer parts sales. The initiative demonstrates effective government regulation that successfully balanced market liberalisation with industry stability, earning Cohen’s rare praise as “a government initiative that really works.”

Domestic Demand Provides Counterweight to Export Pressures

Nicky Weimar, Group Chief Economist at Nedbank, presented an economic outlook highlighting both challenges and opportunities for the automotive sector.

Weimar described South Africa’s modest economic recovery, with GDP growth approaching 1% and strong domestic vehicle sales up 13.8% year-to-date. Declining inflation (now 3.5%) and interest rate cuts totalling 125 basis points have improved consumer affordability, with household debt service ratios falling below 9%.

However, she warned that US tariffs, combined with South Africa’s structural challenges including failing municipalities, expensive power, and inefficient logistics, create significant headwinds for manufacturers and exporters.

Despite these challenges, Weimar projected continued growth in domestic vehicle demand over the next two years, supported by rising household incomes and improved financing conditions.

Industry Demographics Signal Evolving Market Dynamics

Michael Dehn, Managing Director of Messe Frankfurt South Africa, delivered closing remarks highlighting significant demographic shifts in automotive interest, noting that Festival of Motoring audiences are becoming younger (now majority under-40) and the gender split has narrowed from 70-30 male-female in 2019 to near parity today. 

He stated that the “discussions exemplified the collaborative spirit that drives South Africa’s automotive industry forward”, adding that “The calibre of speakers and insights shared reflect our sector’s commitment to addressing challenges through collective expertise and strategic adaptation.”

The Automechanika CEO Breakfast served as a successful precursor to Messe Frankfurt South Africa’s main Automechanika Johannesburg trade fair, taking place at the Gallagher Convention Centre in Midrand from 28 to 30 October.

The breakfast was sponsored by Nedbank, the Automotive Industry Development Centre (AIDC), and SKF, demonstrating strong industry support for knowledge sharing and sector development initiatives.