VWSA secures R27bn global export contract for new Polo
Job chances to follow deal
November 20, 2009
By Roy Cokayne
Volkswagen South Africa (VWSA) has secured a major worldwide right-hand drive export deal for the new Volkswagen Polo, worth about R27-billion over the next six years.
David Powels, the managing director at VWSA, said yesterday that the contract would double VWSA's exports from about 28 500 units this year to 55 000 in 2010 and create hundreds of direct jobs.
The value of the contract was subject to volumes remaining at about 55 000 units a year for the duration of the contract.
Powels said the export deal had been secured as a result of multibillion-rand investment programme by VWSA and its component suppliers.
Investments totalling R600 million by five car part suppliers in new manufacturing facilities at the Nelson Mandela Bay (NMB) Logistics Park in Uitenhage to support VWSA's export contract will create a total of 685 direct jobs by next June.
Powels said these investments, which are by Rehau, Benteler, Flextech, Faurencia and Grupo Antolin, were one of the key factors that enabled VWSA to capture the new Polo export contract.
He said the investments by these component suppliers would contribute significantly towards VWSA increasing the local content levels in the new Polo to 74 percent by the second half of next year from less than 40 percent in the current Polo.
Powels said that VWSA would, by the end of this year, have invested R3.5bn in new plant, local content development and new product, with a further R500m invested next year to complete the process and ensure that the company was well placed to capture future opportunities in the domestic and global markets.
The new Polo would only be launched in South Africa early next year, although production of the new model began at VWSA's plant in Uitenhage in July this year.
Powels said more than 10 000 units of the new Polo had already been exported from South Africa. The number of exports of the vehicle was expected to reach 19 000 units by the end of this year.
The new Polo was being exported to nine key markets: the UK, Ireland, Japan, Australia, New Zealand, Malaysia, Singapore, Cyprus and Malta.
Powels said the establishment of the NMB Logistics Park had been a crucial step to help VWSA become a globally competitive maker of vehicles in the Eastern Cape.
Seventy-seven percent of the firm's suppliers were now based in Nelson Mandela Bay, which was a critical factor in VWSA's globalisation strategy.
Powels said that last year, the South African automotive industry was 28 percent more expensive than western Europe. But the real challenge was to match the cost competitiveness of India, China and eastern Europe, which were substantially more cost competitive than western Europe.
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