South Africa's planned loss of preferential access to the US market under the African Growth and Opportunity Act (AGOA) will add further pressure to an automotive component industry already facing company closures and thousands of job losses, the National Association of Automotive Component and Allied Manufacturers (Naacam) has warned.
Naacam CEO Renai Moothilal | image supplied
The US government intends to end South Africa's AGOA eligibility from 1 January 2027. However, Naacam says the impact on automotive exports will be relatively modest compared with the 25% tariffs already imposed by the US under Section 232.
South Africa's automotive exports to the US fell by 29%, from R28.67bn in 2024 to R20.43bn in 2025, following the introduction of the tariffs.
Direct component exports declined by 12.8% to R3.86bn, while light vehicle exports fell by 31.7% to R16.57bn.
From January 2027, these products will also face the standard US import duty, typically around 2.5% for automotive products. This will put South African exporters at a disadvantage compared with competitors in the UK, European Union, Japan and South Korea, which have negotiated lower automotive tariffs.
Naacam CEO Renai Moothilal said the loss of AGOA preferences represented another cost for an industry that had already absorbed a significant shock.
Component manufacturers under pressure
The association has recorded 15 company closures and more than 7,500 gross job losses among component manufacturers over the past three years.
It attributes the pressure partly to declining local content, production cuts by some vehicle manufacturers, falling exports and rising operating costs.
Naacam says strengthening domestic demand and increasing locally produced content are among the ways South Africa can reduce its exposure to external trade shocks.
The South African Automotive Masterplan (Saam) 2035 set a target of 48.2% local content by 2025, with an estimated value of R101bn. However, local content reached only 39% in 2025, little changed from the 38.7% recorded in 2015. Its value increased from R53bn to R101bn over that period.
Moothilal said the current automotive policy review presented an opportunity to introduce localisation measures that support component manufacturers, protect jobs and help businesses diversify their export markets.
US remains a major automotive trading partner
Despite the trade uncertainty, Naacam says commercial ties between the two countries remain important.
The US was South Africa's fourth-largest automotive trading partner in 2025, with two-way trade valued at R44bn. South Africa imported R20.6bn worth of US-made components during the year, more than five times the value of its component exports to the US.
Several US-headquartered companies also manufacture components in South Africa.
Naacam is calling for continued engagement between the two governments and has advocated for a trade agreement covering trade, investment, skills and technology transfer. It says such an agreement should also address the Section 232 tariffs on vehicles and components.
