- A new bakkie built in South Africa
- A big boost for the automotive component sector
- Africa’s biggest tyre factory gets even bigger
The South African automotive industry was the recipient of three massive investments worth a combined value of R9.5 billion between the last week of August and first week of October.
The first was from the National Association of Automotive Component and Allied Manufacturers (Naacam) which earmarked R4.8 billion between now and the end of 2024 to improve the country’s automotive components sector.
The second was from Stellantis, the world’s fourth-largest vehicle producer, which announced that it will be spending R3 billion to establish a new factory in Coega, Eastern Cape, that will start building a one-tonne bakkie in 2026.
The final came from Dunlop in the form of a R1.7-billion upgrade to its Ladysmith-based tyre plant.
A new bakkie built in South Africa
Stellantis, which formed in January 2021, is the parent organisation of popular brands including Alfa Romeo, Citroen, Fiat, Jeep, Maserati, Opel, and Peugeot.
The company recently revealed that it has set aside a massive R3 billion to establish a production facility in the Special Economic Zone (SEZ) of Coega, Eastern Cape, that is scheduled to be completed before the end of 2025 with the first units to roll through the doors early 2026.
Stellantis will also be investing over 500,000 hours in training and skills to “develop and support the local teams to the level of global standards.”
When finished, the plant is expected to provide employment to around 2,097 people in the province, and it will produce in the region of 50,000 completely knocked down (CKD) units per year including for export, with a capacity to go up to a total of 90,000 CKD units if necessary.
Stellantis has not yet revealed which bakkie it plans to build in South Africa, but it did confirm that it will be a one-tonner of which the company currently has several in its global portfolio including the Fiat Toro/Titano, Ram Rampage, and Peugeot Landtrek – with the Peugeot being a likely candidate for local production as it’s the only one currently on sale in South Africa.
The new factory forms part of Stellantis’ plans to reach over 22% market share with 70% regional localization of sales and one million units produced in the Middle East and Africa (MEA) region by 2030.
According to Khwezi Tiya, CEO of the Coega Development Corporation, the production facility is anticipated to have an economy-wide impact on the province’s GDP of R664 million.
This September, Stellantis also launched its Eurorepar spare parts shop in South Africa as well as the Auto24.africa used-car marketplace, underscoring its commitment to the MEA region.
A big boost for the automotive component sector
A few weeks ahead of Stellantis, Naacam announced a R4.8-billion investment in the South African automotive parts sector that will be implemented between September 2023 and the end of 2024.
While it didn’t divulge the specifics of the cash injection, Naacam said the funds were pledged from a group of 16 businesses comprising a mix of large multinational and domestic component manufacturers as well as emerging black industrialists, coming from all different regions and segments of component manufacturing.
Minister of Trade, Industry, and Competition, Ebrahim Patel, hailed the announcement and emphasised the importance of investment for the country.
“Investment is the lifeblood of growth. So much of our preoccupation is to expand the economy, get more taxes and create more jobs, and generate revenue for essential public services,” said Patel.
“But, all of that depends on investment – a commercial decision driven by an expectation of a return. I am pleased with the pledge here today as this is a strong vote of confidence by component makers.”
The minister noted that investments to such a scale usually target original equipment manufacturers such as carmakers, with component production traditionally being underplayed despite being one of the most fundamental arguments for the incentives that South Africa offers the global and domestic automotive industry.
Africa’s biggest tyre factory gets even bigger
On the eve of the 50th anniversary of its Ladysmith tyre factory, Africa’s largest tyre producer, Dunlop, announced a R1.7-billion investment into its passenger car radial production facility to enable it to run a wider set of products and produce more tyres that meet and exceed original equipment (OE) specifications.
The large sum will go towards plant equipment including a new mixer, tread line, and sidewall line, “which will increase passenger car tyre production capabilities, efficiencies, and product offering to further support the OE market,” said the manufacturer.
The new machinery will also cut down on the plant’s overall waste by as much as 60% once the investment is complete, with the new mixer alone resulting in an energy saving of approximately 300KWH, thus aligning with parent company Sumitomo Rubber Industries’ global sustainability goal of zero carbon emissions by 2050.
Moreover, the domestic facility upgrades will boost job creation in the Ladysmith region and increase South Africa’s overall tyre production capacity, and it is therefore expected to play a noticeable role in the country’s economic growth, said Dunlop.
“Our spend in the local economy has a multiplier effect on job creation and sustaining local businesses,” said the company.
“The time is always right for investment and development, and we thank the relevant stakeholders and partners for lending their support to a conducive manufacturing industry.”
Keyword: South Africa receives R9.5-billion in automotive investments – What the money will be spent on