The deal puts a fleet of nine Volkswagen vehicles at City's disposal.
Club chairman John Comitis said: “We are extremely happy to see a big company like Barloworld investing in us and investing in football. In Cape Town, there’s been a shortage with this kind of interest from big corporates, we are happy to have changed this.
“This deal enables us to make many more dreams come true and gives us the necessary tools to grow the club to an even bigger standard.”
Barloworld, which was established in South Africa in 1902, is a distributor of leading global brands, providing integrated rental, fleet management, product support and logistics solutions.
Premiership rivals Mamelodi Sundowns, Kaizer Chiefs and Orlando Pirates also recently agreed deals with vehicle sponsors Hyundai, Toyota and Ford respectively.