In a strategic move aimed at reinforcing its presence in Africa, Volkswagen Group Africa has announced a significant R4 billion investment in its manufacturing plant located in Kariega. This injection of capital is earmarked for upgrading various facilities within the plant, as well as preparing for the integration of a third model into its production lineup by 2027.

The lion’s share of this investment will be directed towards capital expenditure for refurbishing production facilities, enhancing manufacturing tooling, and ensuring stringent quality assurance measures. With an eye on modernization, nearly R877 million will be allocated to enhancing automation in the Body Shop, while an additional R418 million is earmarked for procuring new press tooling in the Press Shop. The commencement of the initial phase of facility upgrades is slated to coincide with the plant shutdown scheduled for the end of 2024.

Martina Biene, Chairperson and Managing Director of Volkswagen Group Africa, emphasized that this investment underscores the company’s steadfast commitment to South Africa, where it has been actively engaged in vehicle manufacturing for nearly seven decades. Biene stated, “Plant Kariega is an integral part of the Volkswagen Group’s global production network. Since 2011, Volkswagen has infused R10.28 billion into upgrading production facilities, acquiring advanced manufacturing equipment, promoting local content development, and investing in workforce training. This latest investment not only underscores our confidence in the future prospects of the plant but also secures jobs, both within our organization and across our extensive supplier network.”

The upcoming addition of a third model, set to be an SUV, is poised to further diversify Volkswagen’s product offerings in the South African market. This new SUV will share the production line with the popular Polo and Polo Vivo models, which currently dominate the passenger car segment for the Volkswagen Passenger Cars Brand in the country.

Moreover, the preparations for the production of the new SUV present invaluable opportunities for training and upskilling Volkswagen Group Africa’s production workforce. Local content development remains a cornerstone of Volkswagen’s strategy, with the Polo and Polo Vivo boasting impressive local content levels of 46% and 58%, respectively. The company aims to maintain this trend with the new model, targeting a local content level of approximately 40% through a dedicated R1.2 billion investment.

The development of the new SUV is being spearheaded by Volkswagen Brazil, with the Engineering team at Volkswagen Group Africa collaborating closely to adapt the model to meet local and continental requirements. This includes the development of a right-hand drive version tailored specifically for markets like South Africa.

Biene emphasized, “South Africa holds strategic importance for the Volkswagen Group, especially in our long-term ambition to expand our footprint across the African continent, which we view as the next frontier for automotive development. Reflecting this vision, our local company has been renamed Volkswagen Group Africa, signifying our leadership role and aspirations to bolster the Volkswagen brand’s presence on the continent. The new model holds promise for potential expansion into other African markets where Volkswagen has established a foothold.”

In addition, Biene highlighted the evolving landscape of the automotive industry, noting that while global markets transition toward electric vehicles, African markets like South Africa will continue manufacturing and selling vehicles with internal combustion engines (ICEs) in response to prevailing customer preferences. However, she affirmed Volkswagen’s commitment to electrification, citing the imminent introduction of the ID.4 test fleet in South Africa and Rwanda as the beginning of the brand’s electrification journey.