From left, Eastern Cape Premier Phumulo Masualle, VWSA chairperson and managing director Thomas Schaefer, Deputy Trade and Industry Minister Bulelani Magwanishe and Finance MEC Sakhumzi Somyo at the launch of the new VW Polo yesterday. Photo: Quickpix
PRETORIA - Volkswagen Group South Africa (VWSA) was hopeful a decision would be taken this year on the production of a third model at its Uitenhage plant, which would result in the investment of a further R1.5billion in the plant and create more production jobs and among its suppliers.

Thomas Schaefer, chairperson and managing director of VWSA, said yesterday that its production facility was prepared for three different models - the Polo, Vivo and a third model run on a flexible production line - and they were considering four model options.

Schaefer was speaking at a function to announce the launch of the new Polo and showcase the R6.1bn VWSA had invested in its plant and new products. This followed Schaefer’s announcement in August 2015 that VWSA would be investing R4.5bn in new products and facilities.

Schaefer said the total investment increased to exceed R6.1bn, which was partly due to exchange rate fluctuations and the approval of additional plant investments.


He said the past investment programme was important in that it introduced the innovative one-line concept for the first time in the plant, which was now ready to produce more of the group’s model variants.

Different platforms

Traditionally, vehicles were assembled on unique production lines, but with the one-line concept, it was possible to build two completely different platforms on one line, although this was a technical challenge, highly complex and required new thinking and training for the employees, he said.

Schaefer said the plant had sufficient capacity for a high volume third model, but “conservatively R1.5bn but probably more” would have to be invested in specific tools for a third model, such as skin parts and the boot lid for a spec- ial utility vehicle or a pickup, tools for local parts training and start-up costs. Such an investment would create more production jobs as well as jobs among its suppliers.

Schaefer said that following the R6.1bn investment programme they expected the plant to reach its maximum capacity with a three-shift operation of about 160000 vehicles next year.

“The increased volume demands mean that we need a third shift, which would be implemented from April this year and mean they would need an additional 300 production employees. This recruitment will commence shortly,” he said.

Schaefer stressed that, with the rand last year at R17 to the euro, it would not have been feasible to produce another model in the plant, but was happy with a sustainable level under R15 to the euro.

“It would be best around R13 or R13.50 to the euro, but we’re happy where it is (currently),” he said.

If the investment decision taken in 2015 on the planned R4.5bn investment had been due last year, it was unlikely it would have been approved.

“Fortunately, we are long-term planners and we are pleased to see some positive developments occurring in the country and the economy, which should improve business sentiment and bring investor sentiment back. We are definitely more confident than last year and business sentiment has come back,” he said.

Schaefer said the Volkswagen Group believed in the long-term future of South Africa and for this reason had created the Sub-Saharan Africa Region, its fourth international region, which would have substantial benefits for VWSA.

Bulelani Magwanishe, the deputy trade and industry minister, said VWSA’s investment was strategic to ensure the expansion, impact and radical economic transformation, inclusive of black industrialists. “We welcome the efforts of VWSA to support the entrance of black industrialists in the automotive value chain.

“Our black industrial policy is fixed on expanding our industrial base and injecting new entrepreneurial dynamism into the economy. Similar initiatives by other vehicle manufacturers must be advanced through the partnership of the public and private sector and other stakeholders,” he said.

- BUSINESS REPORT