Volkswagen Group Africa has announced a R4 billion investment in its car manufacturing plant in Kariega, near Port Elizabeth in the Eastern Cape, in a bid to upgrade the facility as it prepares it for the production of a third model, an SUV, from 2027.
The car manufacturer said yesterday that most of the R4bn investment would be allocated to capital expenditure for production facilities, manufacturing tooling, local content tooling and quality assurance.
Nearly R877 million will be spent to enhance automation in the body shop while an estimated R418m will be used to procure new press tooling in the press shop.
The first phase of the plant facility upgrade will begin at the end of 2024 during the plant shutdown.
Volkswagen Group Africa chairperson and managing director Martina Biene said the investment announcement reaffirmed Volkswagen Group’s commitment to South Africa, where it had been manufacturing vehicles for nearly 73 years.
“Plant Kariega is an important manufacturing plant within the Volkswagen Group production network. Since 2011, Volkswagen has invested R10.28bn in production facilities, manufacturing equipment, local content tooling and training of people,” Biene said.
“The new investment is a vote of confidence in the future of the plant. It also future-proofs jobs, not only for our people but also those employed in our supplier network.”
The third model, which will be a SUV, will be manufactured on the same production line as the Polo and Polo Vivo.
The Polo and Vivo models are currently the top-selling passenger models for the Volkswagen Passenger Cars Brand in South Africa.
The changes being made in preparation for the production of the new SUV includes training and upskilling opportunities for Volkswagen Group Africa’s production employees.
Volkswagen Group Africa said localisation remained its key priority as the Polo and Vivo currently had 46% and 58% local content levels, respectively.
The trend is set to continue with the new model, which aims to achieve approximately 40% local content through a R1.2bn investment.
Volkswagen Brazil is leading the design and development of the new SUV.
Volkswagen Group Africa’s engineering team has collaborated with Volkswagen Brazil for the adaptation of the new model to the local and continental requirements which, for example, include the development of a right-hand drive version.
Biene said South Africa was an important market for the Volkswagen Group, particularly in terms of the group’s long-term goal to establish its footprint on the continent, which was seen as the last frontier for automotive development.
“As such, we have recently renamed our local company to Volkswagen Group Africa, to represent our steering responsibilities and ambitions to grow the Volkswagen brand on the continent. The new model has the potential to be sold in other African markets where Volkswagen has a presence,” Biene said.
“As most global vehicle markets transition to electric vehicles, African markets like South Africa will continue manufacturing and selling vehicles with internal combustion engines (ICEs) for the foreseeable future, owing to customer demand for ICEs and slow introduction of electric vehicles in these markets.
“However, for the Volkswagen Brand the electrification journey begins this year with the introduction of our ID.4 test fleet in South Africa and Rwanda.”
BUSINESS REPORT