Volkswagen South Africa’s celebrated the launch of its new Polo vehicle on Thursday, capping off a R6.1bn investment in the Uitenhage plant.
VWSA managing director, Thomas Schaefer, announced in 2015 that the company would be investing R4.5bn in new products and facilities for the production of the new polo vehicle.
However, Schaeffer said that cost ballooned to R6.1bn “due to exchange rate fluctuations and the approval of additional plant investments.’
He said in a statement that the majority of the investment spend was on capital expenditure for, among others, production facilities, local content and technology upgrades.
“Localisation remains a key priority for VWSA, with the new models at a 60% local content level, with on-going plans to achieve higher levels,” Schaefer said.
He said VWSA produced 110 000 cars in 2017, and in 2018 this will increase to 133 000 of which 83 000 will be exported to markets around the world.
“This will include not only right-hand drive markets but also to some left-hand drive markets, especially for the Polo GTI. Maximum annual plant capacity is expected to be reached with a 3 shift operation of some 160 000 vehicles, in 2019.”
Schaefer said that “the basic economic fundamentals and an investor-friendly legislative framework within a reasonably stable economic environment is essential when making major investment decisions for Volkswagen, as is a stable and attractive automotive policy”.
“The South African Government must be complimented, firstly for the introduction of the MIDP, which gave confidence to the industry and provided a stable base for the successor programme; the APDP which has also been successful in ensuring a future for the automotive sector in South Africa. The Automotive Sector of the South African economy accounts for approximately 7.4% of the GDP and accounts for the direct employment of 113 000 people,” he said.
“I am convinced that the next phase of the APDP will continue in the same vein and allow for continued automotive investment,”Schaefer said.
Eastern Cape Premier Phumulo Masualle also praised the province’s automotive sector which he said “is one of the key sectors in our provincial economy mix, which we believe, alongside the Oceans Economy, Agriculture and Energy.
He said if leveraged correctly it could see the Eastern Cape Province not only grow the regional economy and contribute towards further national economic growth but also become a leader in the drive to modernise and re-skill our workforce.
“We are particularly encouraged by Volkswagen South Africa's commitment to not only their continued and expanding investment in the South African economy but also bold initiatives such as the announcement of an R86 million grant to SMMEs located in the manufacture and distribution space of automotive parts,” Masualle said in a joint statement.
“This is a clear signal of the private sector accepting that South Africa's future prosperity will depend on the societal effort all of us are prepared to invest, not just Government. We hope to continue our partnership to undertake a skills revolution in our province by jointly entering into training ventures so that we may be able to improve our skills base as an economy but also increase the employability and entrepreneurial prospects of our people.”
The Deputy Minister Trade and Industry, Bulelani Magwanishe, said government was committed to supporting the local vehicle production through the Industrial Policy Action Plan (IPAP).
“Export promotion, job creation and inclusive growth remain as the fundamentals of this policy. It is a privilege to commend VWSA on the launch of its new Polo and its investment of R6,1 billion. Therefore, this investment is particularly relevant to ensure expansion, socio-economic impact and the inclusion of Black Industrialists,” he said.
