X MARKS THE SPOT

Up in Pretoria, BMW South Africa has begun production on the first X cars to be built outside the US. It was quite a coup for the local arm of the company and brought in a R6,1 bn investment from BMW AG. What swung this car our way was the 45 years of excellent production work on the 3-series for the global market.

‘At the time of the announcement, the investment was the highest in the automotive industry in South Africa and symbolic of our long-term commitment to the upliftment of South Africa and its people,’ says Edward Makwana, group communications manager for BMW South Africa. ‘ The investment and production of the BMW X3 is in line with the Automotive Production and Development Programme (APDP), a production incentive run by the Department of Trade and Industry (DTI) that’s linked to production of motor vehicles in South Africa. Essentially, being able to create jobs and keeping employment stable is the biggest benefit.’

In July 2018, BMW SA sent more than 4 000 cars abroad and doesn’t show signs of slowing down as demand for the model surges. X cars represent 30 per cent of total global passenger- car sales for the brand, and halo cars such as the upcoming X7 are soon to break cover and further drive desire for the product.

Locally, BMW has been a vocal advocate for the automotive industry. The company has in the past led talks on electrification and mobility solutions between manufacturers and government stakeholders. As one of the country’s largest exporters, the company is once again engaging with its peers within South Africa and lobbying government to make decisions on crucial policies.

‘ With the APDP due to expire in 2020, BMW South Africa is engaged in ongoing discussions for a long-term replacement for the APDP to run until 2035, known as the South African Automotive Masterplan (SAAM),’ Makwana explains. ‘ We are approaching the relevant departments in government unilaterally and with other local manufacturers /OEMS through the auspices of the National Association of Automobile Manufacturers of South Africa (NAAMSA).’

While the investment of billions of rands into X3 production didn’t come with any specific employment targets, the car’s local production will have a broad effect on the larger supply chain. The BMW X3 has the most locally made components of any BMW ever manufactured in South Africa, and the company is constantly looking for

ways to increase that percentage and further support the South African supply chain. When we spoke to project managers earlier this year, the number was around 35 per cent local components, with SA companies even getting involved in the infotainment system.

It seems one of the key employment considerations for BMW SA is retaining the skills that the company invested training and development efforts into. ‘BMW SA has a highly qualified workforce. With its excellent reputation, it is regarded as one of the most attractive employers. Therefore, we always aim to retain our associates and their skills, even in the toughest times; like we have done in previous years, as well as in current economic conditions,’ says Makwana.

‘ The production of the BMW X3 has enabled us to keep our employment numbers stable. Increased flexibility and higher maximum-production capacity at BMW SA’S Rosslyn plant creates improved prospects for the extended value chain and our stakeholders.’

There is a hard truth behind all this optimism, unfortunately. The premium-vehicle segment is under significant pressure as consumers take the strain of poorly received government policy. The overwhelming response has been better tailoring of financing packages by all automakers, as well as a stronger focus on customer desires. We may be nearing the end of the manufacturing age, but these companies have never made better products and there have never been better deals. Unfortunately, local economics don’t allow for mass spending.

That said, at least South Africa is still an important player in making products for the world. Even if only because our currency is weak, and, by extension, our labour is cheap. People need jobs, and factories will provide them.

BMW SA upgraded the X3 production line to cope with 71 000 cars per year, but quickly had to expand capacity to 76 000.