The CEO of the Volkswagen brand says he is “very worried” about the future of the German automaker’s manufacturing operations in South Africa…

Thomas Schäfer, global CEO of the Volkswagen brand, has sounded a warning to South Africa, saying he is “very worried” about the future of vehicle manufacturing in the country.

Speaking to Reuters, Schäfer pointed to South Africa’s persistent load-shedding, sustained logistical issues (both on the railways and at the ports) and increasing labour costs as key disadvantages to building cars in the country.

The Kariega plant in the Eastern Cape traces its roots back to 1947.

VW SA currently manufactures the prolonged lifecycle Polo Vivo and the Polo hatchback at its Kariega factory in the Eastern Cape. The facility produces the Polo hatch for all right-hand-drive markets – while also supplementing production for left-hand-drive markets – and is the sole producer of the Polo GTI. However, many key export destinations are shifting towards electric vehicles (EVs), casting doubt on the global future of the Polo nameplate.

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That said, back in November 2022, VW SAannounced its intentionto add a new model to its local production line, confirming the upcoming vehicle would ride on the same MQB-A0 platform as thePolo hatchback with a planned production start in 2026 or 2027. The company has also mentioned the possibility of a small bakkie being spun off the same platform.

Schäfer was once the head of Volkswagen Group South Africa.

But the latest comments from Schäfer – the former head of Volkswagen Group South Africa – suggest the Wolfsburg-based brand is closely examining its local operations as it continues a global cost-cutting drive in a bid to remain competitive in the transition to electric cars.

“Eventually you have to say, ‘why are we building cars in a less-competitive factory somewhere far away from the real market where the consumption is?’. I’m very worried about it… We’re not in the business of charity,” he said, according to the Reuters report.

VW has been building the Polo in SA since 1996.

Schaefer, who was appointed global CEO around the middle of 2022, told Reuters that his local team had made strides in what he termed an “uphill battle” but emphasised it was up to the South African government to solve the various issues facing vehicle manufacturers in the country. According to a Business Day report, however, the VW boss added the Kariega facility was safe “for now”.

So, what about a potential switch to building electric cars? Well, Schaefer echoed the sentiments of Martina Biene, chairperson and managing director of Volkswagen Group South Africa, who earlier this year told Cars.co.za it would likely be more than a decade before the German brand started producing EVs at its Kariega plant.

Interestingly, though, Schaefer added that South Africa – which enjoys proximity advantages when it comes to critical minerals such as lithium and cobalt – could transform itself into an EV battery manufacturing hub, should suitable government policies be put in place.

“There’s a realistic chance that South Africa, with enough focus, with all the raw materials in the neighbourhood, they could be a champion,” he said.

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