Volkswagen South Africa (VWSA) is looking to Asia and South America for potential new markets for its petrol and diesel vehicles. This comes after the European Union (EU) announced further restrictions on internal combustion engines and a marked shift towards electric vehicles (EVs) in the near future.
Currently, almost three-quarters of vehicles produced in South Africa are exported to Europe. This accounts for five percent of the country’s total gross domestic product (GDP) and creates around 100 000 jobs. VWSA alone manufactured 129 000 vehicles and 58 000 engines in 2021 – most of which were exported.
The United Kingdom is planning to ban sales of petrol and diesel vehicles from 2030 and the EU will follow closely with a total ban imposed from 2035 onward. This creates an existential threat to the local automotive industry as South Africa currently does not manufacture any EVs. VWSA is aiming to tap into other foreign markets to create a continuous flow out of its assembly line in the Eastern Cape.
Formex Industries is a leading manufacturer of automotive components, welded assemblies and tubular products in South Africa. Our car parts are sold to global original equipment manufacturers (OEMs) and Tier 1 suppliers. Most of these components can be used on both internal combustion vehicles and EVs, such as seatbelt anchors, window frames, door sills and tunnel assemblies.
VWSA employees celebrate the 400 000th Polo to roll off the production line. ©MotorPress.co.za
VWSA will shift focus to other markets
VWSA’s new managing director, Martina Biene, has said the company is not planning an immediate shift into manufacturing EVs. Instead, it will look to form closer partnerships with VW’s Indian and Brazilian manufacturers to produce vehicles for the Asian and South American markets.
“That is clearly our current strategy. I think by 2035, there will be the production of electric vehicles in Africa, but in the meantime, we will probably export less to Europe than other countries,” explains Biene. She adds that the company is hoping to develop and target more of Africa’s untapped markets too.
This will mean that South African-made VWs will be exported to neighbouring countries and further north, where there are no OEMs set up. Demand for EVs will certainly rise in Africa too, so VWSA is buying time by targeting Asia and South America until they can start manufacturing EVs themselves.
South African government mulling roadmap for EVs
The government is currently refining an industry-wide roadmap for the shift towards EVs and sustainable mobility. This plan is set to be production-led, meaning that South Africa will be positioned as a leading manufacturer of EVs and other sustainable forms of transport on the African continent.
While the cabinet has yet to formally adopt this policy, it is in the pipeline. In addition, the government will develop a support package to create an enabling environment for the local production of EVs. Despite the current challenges with electricity supply and severe budget constraints, there is growing support for this roadmap within the government.
A shift towards electrification and other sustainable forms of mobility is inevitable. While no OEMs are likely to ignore EVs, they do need to start thinking about the future. VWSA’s strategy is to buy a bit of time by targeting Asian and South American markets before being ready to switch to the manufacturing of EVs. For more information about our components and products, please contact us today.
Formex Industries is a metal forming and assembly company that supplies a variety of complex products to the local automotive industry and the export market. The company is based in the Nelson Mandela Bay metropole, South Africa’s foremost region for automotive manufacturing and export.
Formex is a Level 2 B-BBEE supplier. The company is owned by Deneb Investments Limited – a subsidiary of Hosken Consolidated Investments Limited (HCI) – one of South Africa’s biggest true B-BBEE companies listed on the Johannesburg Stock Exchange (JSE).
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