Luthando Kolisi jokes that if he finds work at another factory, it will probably end up shutting down. That’s how he lost his last two jobs. Since being let go from the Goodyear Tire & Rubber Co. factory in Nelson Mandela Bay.
The coastal South African city is the heart of the country’s automotive industry, and Kolisi sent out countless applications, while eking out a bit of cash from odd jobs. “I’m slowly beginning to lose that hope,” he said.
The auto sector makes up the biggest share of South Africa’s manufacturing, and its contribution to the country’s economic output rivals that of the mining sector, but it is buckling under the pressure of rising costs and a flood of cheaper imports from India and China.
Companies, including giant manufacturers Toyota and Volkswagen, are clamouring for urgent policy interventions to help them compete. In a rare alignment, unions and investors have joined forces to do the same.
In Nelson Mandela Bay, Goodyear is not the only plant to have shed jobs. The municipality lost 41,000 jobs last year, according to official statistics.
Among all of South Africa’s metro regions, Nelson Mandela Bay experienced the steepest jump in joblessness, with more than 28% of people out of work in the final quarter — up from less than 22% a year before.
“It used to be called the Detroit of South Africa,” Mziyanda Twani, a local leader of the National Union of Metalworkers of South Africa, said from his office overlooking the centre of Nelson Mandela Bay.
Now, without drastic action to save the industry, he said, “this area is soon going to be defined as a ghost town.”
The half-hour drive to Volkswagen’s factory northwest of Nelson Mandela Bay is strewn with evidence of industrial decline.
Mangled roadside armco forms a flimsy barrier to mouldering colonial-era buildings marked by peeling paint and rusted corrugated roofing.
Volkswagen builds VW Polos for all markets outside of South America at its plant in Kariega, on the outskirts of the city.
The company has been operating in South Africa since 1951—and has made successful South Africa-only models, such as the CitiGolf—but it faces a “make-or-break year” in the country, said Martina Biene, chair of Volkswagen Group Africa, in an interview at its sprawling factory complex.
VW, which directly employs around 4,000 people in South Africa, needs to make a decision in the coming weeks on whether to make a large investment in the plant to produce a new light pick-up truck.
That would keep the line running into the next decade, but the current economic and policy environments don’t justify proceeding with a big investment, Biene said.
A decade ago, nine of the top 10-selling vehicles were South African-built. Now, fewer than one-in-three are. Suzuki, which imports most of its models from India, is the second-largest seller of cars in the country, after Toyota.
Chery, from China, only entered the market in 2021, but last year it displaced Volkswagen as the country’s third-largest carmaker.
China’s rapid rise to become the world’s biggest car exporter has been driven by significant overcapacity at home, meaning its automakers compete with South African manufacturers at home and abroad. Around two-thirds of South African-made cars are exported.
According to Bloomberg Economics, China’s share of car imports by volume climbed to 27% last year from 21% in 2024. For trucks, it rose to around 50% from nearly 30%. The price of imported cars fell 4.5% in 2025.
“We get beaten up by the imports, mainly from India and China,” Biene said. “Which is not a train smash if the playing field were level.”
Biene said that local labour costs are twice what they are in India, where Maruti Suzuki’s vast facilities produce four times more vehicles in a year than South Africa’s entire industry combined. On top of that, infrastructure and logistics costs are high.
South Africa’s power supply has stabilised in the past year, after 17 years of chaotic and economically damaging supply disruptions. Energy remains expensive.
Municipal water and electricity networks are crumbling after decades of under-investment, and outages are increasingly frequent in Johannesburg and other cities.
State-owned port and rail infrastructure have improved marginally for bulk raw material exporters, such as coal and iron ore, but those improvements are yet to benefit carmakers, according to Ford’s local chief executive officer, Neale Hill.
Ford’s plant in Silverton, Pretoria, is 600 kilometres (370 miles) from its nearest export terminal. Hill said, “It’s still cheaper to truck our vehicles than put them on the rail.”
He said it cost the company $37 more per vehicle to use rail, and given the plant’s capacity, “it adds up.”
The company, which manufactures the Ranger pick-up in South Africa and has a capacity for 200,000 units a year, has cut 470 jobs at its factories in Silverton and Nelson Mandela Bay.
Mike Whitfield, South Africa CEO of Stellantis, which planned to build a Peugeot-branded pick-up truck in Nelson Mandela Bay, told Bloomberg in an interview that it has paused these plans.
Mercedes-Benz, which exports the C-Class compact sedan out of the Eastern Cape city of East London to the US, has cut 700 workers and is looking to share its factory with another brand.
Nissan abruptly announced that it will cease local manufacturing in June, after more than 60 years, opting to sell its facilities to Chery at the beginning of 2026.
Several automotive CEOs told Bloomberg that they need to see better governance at the state-owned logistics behemoth Transnet, and for private investment into port, rail and electricity infrastructure to be sped up.
They also want a number of policy changes that they believe would stimulate local demand and boost competitiveness.
Among them are reforms to a manufacturing voucher system that is supposed to reward local production, changes to taxes on new car purchases, and an end to state support for semi knock-down, or SKD, assembly operations—where cars are shipped as kits and assembled elsewhere, usually for tax efficiency.
Basic assembly plants employ significantly fewer workers than complete knock-down factories.
The CEOs also said they would like Black Economic Empowerment regulations, which require mandated levels of Black ownership and management participation, or participation in so-called “equity-equivalent programs” such as the Automotive Industry Transformation Fund, to apply to importers as well as to manufacturers.
Anthony Black, emeritus professor at the University of Cape Town’s School of Economics, said the industry’s complaints have some merit.
“Some of their requests have some validity. The growth in imports is a problem,” he said. “The policy also needs to be adjusted to not make it worthwhile to set up SKD operations. I feel quite strongly about that.”
Union leaders have also called for the government to raise tariffs on automotive imports. That would be politically challenging, since South Africa is trying to grow its trading ties with China and India in response to the hostility of the US administration under President Donald Trump, which has taken a vituperous approach to the country, falsely accusing the government of perpetuating a “genocide” against its white citizens.
Tariffs would also add to inflationary pressures in the country, according to analysis by Bloomberg Economics.
Donald Mackay, founder of consultancy XA Global Trade Advisors, said a modest tariff increase of up to a maximum of 30% might help the industry.
“Anything which goes beyond that has massive effects on the price of cars in South Africa,” he said. “The whole industry would be worse off with that.”
Something has to change, though. “There’s an enormous problem in the automotive industry,” Mackay said. “
The government is saying you get all these benefits if you manufacture here,” he said of production rebates.
“Your big challenge is that those benefits are not enough to offset the unpleasantness of making cars here.”
Frank Stevens, Director: Automotive at the Department of Trade, Industry and Competition, told Bloomberg in an interview that the department was “reviewing the masterplan,” a reference to the South African Automotive Masterplan, a policy framework that sets out tariff, tax, and export incentives and runs until 2035.
The outlook isn’t all gloom, the CEOs said. Progress is being made—albeit slowly—on a pan-African free trade agreement that could open up enormous regional markets.
But industry leaders and unions told Bloomberg that they are frustrated that the government doesn’t appear to be taking the brewing crisis seriously enough. In the meantime, more job losses and factory closures seem inevitable.
When Goodyear’s local management called more than 900 workers to a meeting in July last year, Kolisi suspected something was up.
More than 100 security officers arrived, accompanied by a phalanx of police and ambulances. “They were preparing for something,” he said.
Kolisi, a machine operator who’d been working at the plant for 12 years, said he got to the meeting five minutes late. As he arrived, the crowd of workers was already streaming out. The announcement was made. The factory was closing.
Further closures are on the horizon. A Continental tyre factory nearby has warned labour leaders it may be forced to close if operations don’t improve, said Twani, the National Union of Metalworkers of South Africa provincial secretary.
When contacted for comment, the company would only say it “continuously reviews its operations to ensure long-term sustainability and competitiveness in a currently challenging operating environment.”
The impact on the people and places that depend on the industry could be huge. In Nelson Mandela Bay, the crisis is already hitting hard.
The city accounts for 40% of the country’s automotive jobs, and although the sector has brought investment and employment, the municipality faces serious social challenges. Gang violence and drugs are rife, and the municipality has the highest murder rate in South Africa.
Denise van Huyssteen, the head of Nelson Mandela Bay’s local business lobby, has first-hand experience of major carmakers closing shop.
She was working for General Motors, which built Opel and Chevrolet vehicles, when it pulled out of the country in 2017 after 90 years of operations at the cost of 600 jobs.
“Many years ago, it was good for us to be compared to Detroit,” she said in an interview, referring to the famous “Motor City”, which became the largest municipal bankruptcy in US history after its auto industry collapsed. “We’re at a tipping point now. If we don’t move with speed and action, we’ll go down the same road.”
