Johannesburg - BMW will invest R6 billion in South Africa after awarding a contract to its plant in Rosslyn in Pretoria for the production of the new generation BMW X3 for the domestic and export markets.
Trade and Industry Minister Rob Davies said yesterday that this was the biggest single investment by a company in the automotive sector in South Africa. He added that automotive companies obviously saw something that was right in the South African environment and had invested R25bn in the country since 2009.
Azar Jammine, the chief economist at Econometrix, said any investment in the country was positive and BMW obviously regarded South Africa as a solid base from which to export vehicles and, at a certain currency level, saw South Africa as being quite competitive.
However, Jammine speculated that the BMW X model range might be more technologically advanced than its sedans, which could involve greater automation in the production process and make BMW “less vulnerable to the whims of the trade unions”.
Tim Abbott, the managing director of BMW South Africa, said the Automotive Production Development Programme was paramount to this investment decision and BMW SA had also shown consistency.
Competitive basis
It had not experienced a strike since 2013; it could produce quality vehicles, as evident from its JD Power platinum plant quality award earlier this year; and it could deliver on a competitive basis, with the depreciation of the rand helping it in this regard, he said.
BMW SA has been critical in the recent past about the negative impact of strikes on the perception of the country as a reliable supplier and as a destination for foreign investment.
But Abbott said several BMW board members had worked in South Africa and had a close affinity with the country and “they don’t believe the chatter that you see in the newspapers”.
Abbott said production of the BMW X3 at the Rosslyn plant would replace production of the BMW 3-Series sedan, which would be allocated to other plants in the group’s production network.
He declined to comment on when production of the BMW X3 would commence, but confirmed BMW models typically had a seven-year lifecycle.
Production of the current BMW 3-Series model commenced at the Rosslyn plant in 2012.
Abbott said more than R3bn would be invested in new state-of-the-art facilities at the Rosslyn plant for the production of the BMW X3 and an additional estimated R3bn for suppliers, launch costs and training.
Stephan Huelsenberg, the director of BMW Plant Rosslyn, said the investment would be to upgrade the entire plant, with the biggest single portion invested in a new body and paint shop, and the introduction of new welding and assembly technologies.
Abbott was unable to comment on the volume of BMW X3s to be produced at the Rosslyn plant or the number of jobs that would be created.
He said BMW X models now accounted for 28 percent of the vehicle maker’s total global sales, the model was growing in popularity and it was expected shortly to account for one in every three BMW models sold.
The Rosslyn plant will produce about 70 000 units this year, with 70 percent of this exported.
Abbott said exports would continue at this level with the BMW X3, but local content in the new model would increase.
He said it was inevitable that suppliers would look to invest in South Africa because of BMW’s commitment to the new model and the surety of supply over the coming years.
Abbott said the BMW X3 was currently being built at the group’s Spartanburg plant in the US.
Abbott said BMW X3 exports from the Rosslyn plant would typically go to markets in Europe, but it would also be looking to export into markets in Africa, such as Nigeria, Kenya and Tanzania.
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