The head of Volkswagen Group South Africa says the company doesn’t want to leave Mzansi “at all”, but adds that government needs to fix some issues “rather sooner than later”…

Martina Biene, chairperson and managing director of Volkswagen Group South Africa, says the German automotive giant doesn’t want to leave the country “at all”, but adds that the government needs to implement various fixes “rather sooner than later”.

Biene made the comments during an interview with eNCA, responding to a Reuters report quoting Thomas Schäfer, global CEO of the Volkswagen brand, as saying he is “very worried” about the future of vehicle manufacturing in South Africa.

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

“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,” Schäfer said, according to the Reuters report.

Biene told the news station Schäfer’s comments were “clearly a warning”.

“We don’t want to leave – not at all. And the intention is not to do so. But we need some fixes and we need them rather sooner than later,” she said, adding “let’s take it as a warning, what has been said [by Schäfer]”.

The VW Group SA MD said life for the German brand’s local division “mainly has been made difficult by the government not making decisions”.

“That’s a major part of the worries and also something Thomas [Schäfer] expressed. If I may give you one example, we recently had to go to [Volkswagen Group] headquarters to apply to purchase or to rent generators to run our plant in case of load-shedding. Renting generators for a 14 MWh plant is R130-million over 2 years.

“So, that’s R130-million [that isn’t going to be] invested into a product or [used to] upgrade our facility, but it’s just a waste of money that we’ll have to explain to headquarters. And money’s getting tighter also in headquarters,” Biene explained to eNCA, referencing VW’s global cost-cutting drive as it bids to remain competitive in the transition to electric cars.

“We want to build a 3rd product in our Kariega plant… But as I said, generator purchasing or renting doesn’t help with our feasibility calculations. I think if we don’t manage to solve the significant issues during the course of next year [2024] – not solve them, but really provide an answer – then we would have a problem in terms of sustaining our business.

“We are asking not for gifts; we are asking for a business environment in which we can competitively operate. Our biggest competition is not the other brands – that happens at the very end in terms of product – our biggest competition is internally in VW,” she explained, making reference to competition with VW plants in other parts of the world.

Biene said that although the company’s costs for exporting cars to Europe were becoming “increasingly uncompetitive”, VW still saw great potential on the continent.

“We are very passionate about the country and also about the potential the African continent provides to us. But one must see somehow an upwards trajectory in terms of things getting fixed.”

As a reminder, VW SA currently manufactures the prolonged lifecyclePolo Vivoand thePolohatchback 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 thePolo GTI. However, many key export destinations are shifting towards electric vehicles (EVs), casting doubt on theglobal futureof the Polo nameplate.

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