VW to pump R4bn in SA
KARIEGA OPERATION WILL PRODUCE COMPACT NEW SUV MD says this is a vote of confidence in the future of the plant and in the country.
Volkswagen (VW) Group Africa will invest R4 billion in its Kariega plant in the Eastern Cape to prepare for the manufacture of a third model – a compact sport utility vehicle (SUV) – at the plant from 2027.
The announcement follows one earlier this year that the plant will, from July, become the sole manufacturer supplier of the Polo for global markets.
VW Group Africa chair and MD Martina Biene said the compact SUV model will be manufactured on the same production line as the Polo. She said it was a car with the potential to be sold in other African markets where Volkswagen has a presence.
Biene said most of the investment will be allocated to capital expenditure for production facilities, manufacturing tooling, local content tooling and quality assurance.
Of the total investment:
Almost R877 million will be spent to enhance automation by installing new robots for the new model; and
An estimated R418 million will be used to procure new press tooling for the new vehicle.
Biene said the first phase of the plant facility upgrade will begin at the end of this year during VW’s annual plant shutdown.
She added that the changes would also create training and
upskilling opportunities for VW’s production employees.
“The new investment is a vote of confidence in the future of the plant and South Africa,” she said.
The investment in the plant and its growth is to secure the current level of employment and a stable three-shift operation with 4 000 people being employed directly by VW
South Africa.
“It future-proofs jobs, not only for our people but also those employed in our supplier network,” she said.
Comments taken out of context
Biene said the commitment and long-term future of VW in SA was inadvertently put in the spotlight in November last year when the comments of VW passenger car brand CEO Thomas Schaefer were quoted out of context.
She said misinformation and fake news on social media claimed that VW was planning to disinvest from SA because of electricity, transport and logistics challenges that were impacting the company’s manufacturing operations.
Biene said the challenges Schaefer highlighted were the issues he had raised during his tenure as VWSA MD and the same issues she has raised several times with government and the media.
“These are worrying and ongoing challenges that Volkswagen and many other companies operating in South Africa are grappling with, but they have not yet forced our company to reconsider its future in this country,” she said.
Challenges and measures
Biene said VW Group Africa had taken precautionary measures to ensure it could deliver on the trust shown in the company by its German parent company through the investment in the new SUV model and making the plant the sole manufacturer of Polo.
She said the “precautionary measures” included investing R130 million to allow the plant to operate during load shedding.
But she stressed she did not want government to suggest that VW’s future in SA was secure because of the investment.
“If that is the outcome, I’ll be very cross,” she said.
Biene said the company was looking to produce 50 000 units of the new model a year but is trying to increase that number.
It future-proofs jobs for our people and to those in our supplier network