VWSA veers into Africa
ON THE MOVE: THIS IS IN LINE WITH SHIFT IN ITS EXPORT FOCUS FROM EUROPE
Giant carmaker sees continent as ‘last frontier for automotive growth’.
Volkswagen Group South Africa (VWSA), which exports about 70% of the vehicles produced at its Kariega, Eastern Cape, plant to global markets, is to make a significant investment in the production of a third model locally that is specifically aimed at the rest of Africa.
This is in line with a shift in its export focus from Europe to Africa. It is also making significant investments in energy security at its plant and in environmental initiatives as part of its commitment to be carbon-neutral by 2030.
These investments are taking place despite Volkswagen passenger car brand CEO Thomas Schaefer in December saying he is “very worried” about the future of the company’s operations in SA, which is fighting persistent power cuts and logistics issues.
VWSA MD Martina Biene said this week its biggest competitor was not other manufacturers but the other 117 Volkswagen plants globally its head office “can throw money at”.
She said: “[Schaefer] has not said we will leave but that this country is in a very uncompetitive position for investments.
“We are both passionate about South Africa but there comes a moment when you can’t sell to your headquarters an additional R150 million for generators and an additional €45 (about R925) per car in the local market to transport them to Gauteng.
“We want to be here and there is not any intention to leave but if nothing happens, we will be forced to.”
VWSA production director Ulrich Schwabe said generator units are being installed at the Kariega (formerly Uitenhage) plant as a backup to its energy needs during load shedding and outages.
He said the rental units will cost R130 million for the next two years, starting from March, and the daily running costs is R1.6 million. “It’s expensive but better than losing production of cars.”
Schwabe said solar photovoltaic panels have also been installed at its sites at a cost of R45 million that are capable of generating 4 488MWh of electricity per year.
He said solar panels installed at the employee car park for the Kariega plant will be added from September and provide a further 4 500MWh in generating capacity at a cost of R55 million.
The shift in VWSA’s export focus has resulted in it starting to trade as Volkswagen Group Africa from this week, which is now the fifth region in the Volkswagen group. Biene said the future of VWSA lies in Africa and SA will be the production hub for its focus on rest of the continent.
This decision has been partly influenced by the slower transition by SA to new energy vehicles (NEVs) and the European Union ban on internal combustion engine (ICE) vehicles from 2035.
Biene said the stricter EU Euro 7 emission standards for ICE vehicles are now only likely to be implemented in 2027 and 2028, which gives VWSA the opportunity to produce the Polo for export into the EU for a longer period.
Volkswagen already has semiknocked-down assembly operations in Rwanda, Ghana and Kenya.