Volkswagen has announced an investment of R4 billion for its South African manufacturing plant in the Eastern Cape.
The German carmaker said the majority of the investment would be centred around preparing the Kariega plant to build a third model range from 2027 onwards.
VWSA has previously indicated that it was pushing to secure production of this “third model” but Tuesday’s announcement all but confirms that the project has been given the go-ahead.
The company confirmed that the new compact SUV model was being developed in Brazil, and that a South African engineering team was involved in the process to ensure the vehicle is adapted to local and continental requirements.
The new SUV will be based on the current Polo’s MQB AO platform and will also share a production line with its hatchback sibling.
VWSA CEO Martina Biene previously indicated that it would slot beneath the T-Cross.
Biene said the product had the potential to be sold in other African markets where the brand has a presence.
“South Africa is an important market for the Volkswagen Group, particularly in terms of our long-term goal to establish our footprint on the African continent, which is seen as the last frontier for automotive development,” CEO Biene said.
Biene added that although most global markets were transitioning to electric vehicles, African markets like South Africa would continue to produce internal combustion vehicles for the foreseeable future.
However its electrification journey is set to begin this year with the introduction of its ID.4 test fleet in SA and Rwanda.
Volkswagen’s Eastern Cape plant is facing something of an existential challenge, given that 70% of its Polo output is exported to Europe.
With the Polo set to be discontinued globally later in the decade, VWSA will need to secure as many export markets as it possibly can for the upcoming SUV.
Volkswagen has so far invested over R10 billion in the Kariga plant since 2011.
The latest R4 billion in funding will be spent on refurbishing the local production facilities as well as local content tooling, quality assurance and worker training.
The facility is aiming for a 40% local content level for the new SUV.
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