Volkswagen South Africa has refuted rumours that it plans to leave South Africa. Social media was abuzz over the weekend when an executive of the German parent company was quoted in a media report, lamenting the current business environment in South Africa.
He was also quoted as citing labour costs and the electricity supply problems, and asking why the company would build cars here, in a less competitive factory away from the market.
Economists have warned that the status quo in South Africa does the economic outlook no favours, especially for large-scale investors like motor manufacturers.
The automotive sector is a huge economic player in South Africa. Data from a survey by the National Association of Automotive Component and Allied Manufacturers conducted early this year, stated that the automotive sector contributed more than 4% to the country’s gross domestic product in 2022.
Video: Load shedding’s impact on Automotive sector:
The component sector alone exported a record R69.2 billion worth of goods.
However, the recent stints of load shedding are having a negative effect on this industry. This is despite certain manufacturers having agreements in place with their municipalities or industrial development zones (IDZs) to limit load shedding at their operations.
Director of the School of Economics, Nelson Mandela University, Prof Ronney Ncwadi says, “Load shedding is becoming a huge problem for the automotive industry in the country and it’s just a matter of time many manufacturers close shop and go where there is stability for their businesses. The downside of it all is the knock-on effect of load shedding is that it causes people to lose jobs, at a time when things are so tough economically. So it’s not just about not being as productive as before but the detrimental knock on load shedding has on the whole value chain,”
Volkswagen South Africa has allayed fears and rumours making the rounds on social media, that it plans to leave South Africa. The vehicle manufacturer employs over 3 500 people in the country.
Volkswagen SA Spokesperson Andile Dlamini says, “The social media report claiming that Volkswagen is planning to exit South Africa is incorrect. The post on X presents false information which has been taken out of context, of the interview the Volkswagen CEO Mr Thomas Scheafer had with Reuters on Friday. Volkswagen is still fully committed to South Africa where it has been manufacturing vehicles for over 72 years.”
There are also calls for the government to speed up its efforts to implement better energy-efficient methods to prevent any possibility of big industries jumping ship.
