President Cyril Ramaphosa has welcomed Volkswagen Group Africa’s R4 billion investment linked to the introduction of the new Volkswagen Tengo, describing it as a vote of confidence in South Africa’s manufacturing capabilities, workers and investment environment.
President Ramaphosa was speaking at Volkswagen Group Africa’s 75th anniversary celebration at the company’s Kariega plant in the Eastern Cape on Monday evening.
The investment will support the introduction of the Tengo, which will become the third model manufactured at the Kariega plant, alongside the Polo and Polo Vivo.
“We are greatly encouraged by Volkswagen's continued investment in our country. We particularly welcome the R4 billion investment associated with the introduction of the new Volkswagen Tengo.
“It is a vote of confidence in our workers. It is a vote of confidence in our manufacturing capability. And it is a vote of confidence in South Africa as an investment destination,” President Ramaphosa said.
The President said the investment should not be taken for granted, particularly in an intensely competitive global environment.
He said South Africa must continue demonstrating that it has the capabilities, skills and policy environment required to attract and retain major investments.
Automotive sector vital to economy
President Ramaphosa highlighted the importance of the automotive sector to South Africa’s economy, noting that it supports more than 115 000 direct manufacturing jobs and more than half a million jobs across the automotive value chain.
The industry accounts for just over 5% of gross domestic product and reaches 155 export destinations.
“Vehicles manufactured by our plants reach markets across Europe, the United Kingdom, the United States, Africa and many other parts of the world.
“The automotive industry is therefore vital to our efforts to grow the economy, expand exports, attract investment and create jobs,” he said.
Volkswagen has produced close to five million vehicles at the Kariega plant since the first Beetle rolled off the production line in what was then Uitenhage on 31 August 1951.
The President said the plant is the oldest Volkswagen manufacturing facility outside Europe and the only plant in the world manufacturing the Volkswagen Polo and exporting it to Europe and the Asia-Pacific.
Last year, more than 156 000 vehicles were produced at Kariega, with almost 120 000 exported to international markets.
Focus on new-energy vehicles
President Ramaphosa said the automotive industry was undergoing profound change as manufacturers transition towards battery electric vehicles, hybrids and other new-energy technologies.
For South Africa, he said, this presented both a challenge and a significant opportunity.
“We have an established automotive manufacturing base. We have skilled workers. And we have significant reserves of many of the critical minerals required for the technologies of the future. We must build on these strengths,” he said.
Government is working to create a stable, predictable and supportive policy environment that enables automotive companies to invest, localise and grow.
President Ramaphosa said government is reviewing the South African Automotive Masterplan and the automotive policy framework to ensure that they respond to changing conditions in the industry.
“Detailed discussions are underway among all partners, including the industry, unions and government, to develop a common programme to grow and sustain the automotive sector in South Africa. We are committed to concluding this work as a priority,” the President said.
He said the country needs a sustainable plan that addresses constraints, unlocks opportunities, builds skills, creates policy certainty and enhances South Africa’s competitiveness as an investment destination.
Growing local value
The President said government’s objective is to increase vehicle production in South Africa, ensure more vehicles sold locally are manufactured domestically and create more jobs and opportunities.
He also called for greater participation by black industrialists in the automotive value chain and for South African companies to develop capabilities in batteries, electronics and other technologies that will shape future vehicles.
“We must not only assemble the vehicles of the future. We must increasingly manufacture the components, process the materials and develop the skills and technologies that go into them,” he said.
President Ramaphosa also pointed to the African Continental Free Trade Area as an opportunity to build larger markets, develop regional value chains and expand automotive manufacturing across the continent.
“And we want South Africa to remain an important manufacturing base for vehicles made for South Africa, for Africa and for the world,” he said.
Investment in communities
The President also welcomed Volkswagen’s investment of more than R800 million in social investment in communities around the Kariega plant.
He highlighted the establishment of the LEAP 9 Maths and Science School in KwaNobuhle and Volkswagen’s work with the Department of Basic Education on early childhood development and mathematics and science competencies.
The company also invests R40 million annually in the Youth Employment Service, which gives unemployed young people their first experience of work.
“These investments remind us that the future of advanced manufacturing begins long before a young person enters a factory.
“It begins in our schools, in the teaching of mathematics and science, and in giving young South Africans the skills and confidence to participate in the economy of the future,” President Ramaphosa said.
He commended Volkswagen for its contribution to skills development, supplier development and community investment.
75 years of partnership
Reflecting on Volkswagen’s 75-year presence in South Africa, President Ramaphosa said the company had become part of the country’s social and economic fabric.
He noted that during apartheid, Volkswagen was the first company in the automotive industry to recognise black trade unions and employ black artisans.
“Tonight we celebrate this proud history. We celebrate generations of Volkswagen employees who have built this company. We celebrate the suppliers, dealers, organised labour and communities that have been part of this journey,” he said.
President Ramaphosa called for stronger partnership between government, business and labour as the global automotive industry transitions towards new-energy vehicles.
“And as the global industry transitions towards new-energy vehicles, we want South Africa to be part of Volkswagen's future technology and manufacturing strategy,” he said.
He said investment decisions being made today would determine where vehicles of the next decade are manufactured.
“Much has changed since then. The vehicles have changed. The technologies have changed. The markets have changed. And the world has changed. But what has endured is the partnership between Volkswagen and South Africa.
“We thank the Volkswagen Group for its continued confidence in our country. And we look forward to the next chapter of this relationship,” he said.
President Ramaphosa concluded by thanking Volkswagen for its 75 years of investment in South Africa.
“Let us work together to build people’s cars in this country for many years to come,” the President said. – SAnews.gov.za
