Banele Ginindza
South Africa’s automotive manufacturing industry is facing renewed strain amid stalled wage negotiations between employers and unions, with industry leaders warning that 2025 production levels could fall short of last year’s already subdued output.
The National Association of Automotive Component and Allied Manufacturers (NAACAM) on Friday said vehicle production is unlikely to meet earlier projections, as the sector battles a downturn in exports and ongoing labour tensions.
According to NAACAM, component exports fell by 5% in 2024 compared with 2023, while vehicle assembly volumes missed 2024 targets by 11.5%. The association said the sector’s recovery in 2025 “will struggle to surpass” last year’s performance, given weak demand, domestic bottlenecks, and the risk of industrial action.
NAACAM CEO Renai Moothilal said ongoing wage talks between the Automobile Manufacturers Employers Association (AMEO) and the National Union of Metalworkers of South Africa (Numsa) have reached a critical point, warning that any strike action could significantly disrupt the industry.
Moothilal said work disruptions at this stage have the potential to significantly harm the entire automotive manufacturing value chain, with component manufacturers likely to feel the brunt of it.
He said the sector continues to face structural challenges, including global oversupply, domestic steel shortages, and rising import competition, adding that further disruption toward year-end closure would compound an already fragile situation.
“With NAACAM having already tracked 12 component plant closures linked to more than 4 000 direct job losses over the past 24 months, industrial action now will be a severe blow with obvious negative implications,” Moothilal said.
The wage impasse comes as Numsa rejected AMEO’s offer of a 7% annual increase, insisting on three-year wage hikes of 9%, 8%, and 8%, alongside a R20 000 gratuity and higher employer contributions to healthcare.
Employers, represented by AMEO, have proposed a three-year deal tied to consumer price inflation (CPI), currently at 3.4%, offering increases of 6.5%, 5%, and 5% — later revising the first-year offer to 7%, followed by 5.5% in each of the next two years.
Numsa General Secretary Irvin Jim on Friday dismissed the proposal as “a wage freeze by another name,” arguing that it failed to reflect rising living costs and the 12% electricity tariff increase granted to Eskom by Nersa.
Jim said the difference between CPI and the electricity increase is 9%, which is a cost that affects workers’ standard of living. He said that employers have, however, only moved by 0.5% and they would be subjecting the entire industry to a strike because of a difference of 1% for a period of three years.
“If truth be told, companies can give this increase of 1% for the two years and still run productivity and efficiencies of managing production and make even more money than the contemplated loss,” Jim said.
Jim said employers were being “irresponsible” by refusing to improve their offer, arguing that the 1% gap between the parties “translates to just 0.33% per year” and could easily be absorbed through productivity gains.
Numsa also took issue with the wage offer being aligned with settlements in the component supplier value chain — the motor sector — where the union agreed to 6%, 5%, and 5% increases earlier this year.
Jim said this comparison was unfair, noting that in related industries, such as plastics and engineering, Numsa settled on 7%, 6%, and 6% increases when inflation was lower than it is now.
He said this dispute in the automotive industry is taking place with CPI at 3.4%, and yet employers expect workers to accept lower settlements than before.
“Employers created an impression that they are prepared to review their position,” Jim said.
“However, in the negotiations yesterday, on the 30th of October 2025, we were faced with employers only being prepared to improve their position in the first year and the next two years only by 0.5% as they offered 7% in the first year and 5.5% in the respective two years.”
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