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Volkswagen Group South Africa completes major investment programme

Volkswagen (VW) Group showcased its new product offering including a R6.1 billion investment at its Port Elizabeth plant, in the presence of Eastern Cape Premier, Phumulo Masualle, Deputy Minister, Bulelani Magwanishe of the Department of Trade and Industry (DTI), and other key stakeholders.

The showcase included a launch of VW’s new Polo.

Premier Masualle said, “The automotive sector is one of the key sectors in our provincial economy mix, which we believe, alongside the Oceans Economy, Agriculture and Energy, if correctly leveraged, can 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 work force.”

VW South Africa produced 110 000 cars last year. According to the company, the investment will increase that number to 133 000 for 2018 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.

“We are encouraged by VW 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.

“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 to improve our skills base as an economy and increase the employability and entrepreneurial prospects of our people,” concluded Masualle.

Investing in VW

In August 2015, Chairman and Managing Director of Volkswagen Group South Africa, Thomas Schaefer announced an investment of around R4.5 billion rand in new product and facilities. The total investment exceeded R6.1 billion rand, which is partially due to exchange rate fluctuations and the approval of additional plant investments.

The majority of the investment spend was on Capital Expenditure for production facilities, local content tooling, quality assurance and manufacturing equipment as well as Information Technology upgrades.

Innovation: a concept

Volkswagen has also introduced the innovative One-line Concept for the first time as part of the investment, which includes a new integrated logistics concept.

“Traditionally vehicles are assembled on unique production lines. It has always been possible to build derivatives of the same platform on one line, but to build two completely different platforms on one line is a technical challenge, highly complex and requires new thinking and training for the employees,”said Schaefer.

While there are no short term financial benefits for this new concept, Volkswagen predicts that there will be synergies and efficiencies as well as people benefits that come about as the result of the one line concept.

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