Mercedes-Benz South Africa (MBSA) says it will move from three shifts a day at its East London plant to two shifts, in a move that could potentially cut 700 jobs.
MBSA produces the C-Class for the local and export markets, with more than 90% of production exported. Production reached around 90 000 units last year.
MBSA employs more than 3 000 people.
MBSA says it has entered a consultation process in accordance with Section 189(3) of the Labour Relations Act, focused on the restructuring of its manufacturing operations.
“In recent years, the automotive industry has contended with several challenges, which have also impacted MBSA and its suppliers,” says the local arm of the German premium car brand.
“These challenges include deteriorating macroeconomic conditions and prolonged port challenges.
“Overall consumer sentiment has suffered as a result of fluctuations in the exchange rate, subdued household income, rising fuel prices, as well as increased energy and logistics costs.
“Against these pressures, we have implemented various measures to address and improve the performance of our manufacturing operations, including cost-saving initiatives and efficiency improvements.
“However, despite our best efforts, the current operating environment remains challenging, necessitating further action to ensure the long-term sustainability of our manufacturing operations.”
In May, MBSA sold an estimated 478 new vehicles in the domestic market, while it exported 7 500 units. This is according to data from Naamsa | The Automotive Business Council.
Mercedes-Benz monthly sales reached well over 1 000 units a month as recently as 2020.
Premium car sales have plummeted in South Africa owing to the struggling domestic economy, with consumers increasingly opting for cheaper alternatives from imported brands.
MBSA has also been forced to spend R100-million-plus on solar energy projects to go green and to counter unreliable electricity supply from Eskom.
Globally, Mercedes-Benz Cars sales reached 463 000 units in the first quarter, down 8%.