Mercedes wants to share its South African factory with a competitor
- We recently saw that the Chinese carmaker Chery acquired Nissan's Rosslyn plant in South Africa. The Japanese carmaker wanted to reduce its global production capacity, deeming the plant too large relative to its actual sales. Furthermore, the Nissan plant in South Africa allows Chery to extend its international expansion across the continent.
- Today, we learn that another carmaker based in South Africa, namely Mercedes, which has the East London factory in that country, would like to partially withdraw from its activity in this factory.
- It is worth remembering that the Mercedes factory in East London has been producing C-Class sedans for about thirty years, for local markets but especially for large-scale export, particularly to North and South America.
- However, new tariffs imposed by the United States on imported cars have caused a sharp drop in Mercedes C-Class sales in the country (the US ceased production of the C-Class domestically in 2020). Consequently, while the East London plant has a production capacity of 100,000 cars per year, actual production of the model fell from 95,000 units in 2023 to 80,000 in 2024 and 70,000 in 2025. And forecasts for 2026 anticipate a further decline.
- Mercedes is therefore looking for a carmaker that could help it make its factory profitable by taking over half of the factory's capacity, rather than the entirety. This isn't a very attractive solution, since the carmaker accepting this proposal would have to share the factory with Mercedes. However, a Chinese carmaker might be drawn to this offer.