Volkswagen to invest $340 million in South Africa image

As Volkswagen AG is looking to become world’s biggest automaker by 2018, the German company plans to invest $340 in the South African industry for new products and infrastructure.

The car manufacturer stated that it will spend around $228 million on production facilities at the Uitenhage factory, situated near Port Elizabeth in the Eastern Cape province of South Africa and approximately $114 million on improving the supply chain by 2017. Moreover, Volkswagen Group South Africa (VVWSA) would invest around $1.6 million in development and employees training.

VVWSA said “This will be the first time that a version of the Modular Transverse Matrix platform will be utilized in South Africa featuring the latest technologies and driver assistance systems. This will be built for both the local and export markets”

Thomas Schaefer, managing director of Volkswagen Group South Africa, added that “Exports will again play a key role in our strategy going forward.”

The National Association of Automobile Manufacturers of South Africa said this month that due to a weaker rand, which is the South African currency, car manufacturers there, which include Toyota Motor Corp., BMW AG and Mercedes-Benz AG, are expected to export 18% more cars this year. The industry body added that sales in the domestic auto market will probably decline 2.8% in 2015 as drivers are facing rising fuel costs and interest rates.

Between 2007 and 2014 VWSA invested about $448 million in South Africa for the current generation Polo and Polo Vivo as well as for plant and infrastructure. VWSA has dominated the passenger market for the last five years and managed to stay on top even in 2015 with a year-to-date market share of 21.4%.

*note: Volkswagen overtook Toyota as the world’s largest carmaker by sales in the first half year – not full year, achieving its long-held ambition three years ahead of target.