Wage talks between South Africa's main manufacturing union and employers in the auto component sector hit a deadlock on Friday, raising fears of labour unrest potentially affecting car makers such as Ford, Volkswagen and Toyota.
The talks reached a stalemate after the National Union of Metal Workers of South Africa's (Numsa) demand for a one-year deal for all workers across the automotive value chain was turned down by the Retail Motor Industry Organisation (RMI), which wants to lock the workers down to a three-year deal.
The current three-year agreement ends on 31 August.
"I can confirm that Numsa has declared a dispute with all the employer parties in the Motor Industry Bargaining Council," Jan Schoeman told Reuters.
Numsa officials were not immediately available to comment.
The dispute will be referred to mediation talks to try and break the impasse. A strike may be called if that fails.
The militant Numsa union, which represents around 100,000 workers in the auto retail sector, held a month-long strike in the auto sector after pay talks deadlocked in 2013, disrupting assembly lines at car plants and bruising investor sentiment.
Numsa wants a 20 percent wage hike, as well as better housing and medical aid perks, as Africa's most industrialised country struggles to avoid recession.