Why the world’s 3rd-biggest carmaker picked South Africa for its newest factory

The world’s third-largest automaker has made the big decision to build a brand-new factory in South Africa that is set to pump out vehicles by early 2026.

The facility is being built in the Eastern Cape in the Coega Special Economic Zone just outside Gqeberha, making it the fourth major automotive operation in the region alongside VW, Isuzu, and Ford’s own production centres.

It represents a R3-billion investment from Stellantis, and is part of a much bigger plan that the manufacturer has for South Africa and other markets around the world.

Why South Africa?

Stellantis first announced its intention to construct a new factory in South Africa in March 2023, though at the time it did not provide any further details on what brands and models would eventually be produced here.

For those who are unaware, Stellantis is a relatively new player in the global auto scene and is the parent company of no less than 14 different brands, making it the world’s third-biggest carmaker by volume.

Of the 14 badges, eight are available in South Africa including Abarth, Alfa Romeo, Citroen, Fiat, Jeep, Maserati, Opel, and Peugeot.

This led to months of speculation as to what the Eastern Cape facility would eventually produce, given the vast number of models Stellantis can choose from in its combined line-up.

By November 2023, the organisation had an answer for us, as it was confirmed that the Peugeot Landtrek was chosen as the next vehicle to be made in Mzansi.

Since then, the project has advanced to the point where construction is now in the initial phase, as the Coega Development Corporation (CDC) recently completed preparations for the area by clearing or relocating all the site’s flora and fauna.

The decision to build the Peugeout Landtrek of all cars is a bit of a surprise, as the bakkie has not been a big sales hit in South Africa up till this point, placing 13th overall in 2023’s best-seller’s list.

In light of this, we reached out to Stellantis South Africa for more information on why the company made the decision to build a factory here, and why it chose the model that it did.

It explained that South Africa was identified as the best candidate to support the business’s strategy to expand further into markets in the Middle East and Africa (MEA), and that a bakkie was picked due to the country’s strong affinity for the body type.

“As part of our strategy for Dare Forward 2030 we will support our pickup market for the Stellantis region with manufacturing within the MEA region,” said Deidre Du Plessis, Head of Corporate Communications at Stellantis South Africa.

“Based on the strong and consistent automotive policy and the well-established pickup component supply base in South Africa and potential of the pickup market in Africa, we felt South Africa is ideally suited for our new industrial operation in the region.”

It’s worth noting that South Africa’s double-cab sector is notoriously competitive due to the loyal fanbases that a few brands have managed to establish, which is why the market is largely dominated by three units – namely the Toyota Hilux, Ford Ranger, and Isuzu D-Max.

“The big three” are responsible for the lion’s share of light commercial vehicle (LCV) sales and other manufacturers have tried to enter the space with limited success.

The Mazda BT-50, for instance, was recently discontinued due to poor sales, and the Japanese firm cited the cut-throat bakkie landscape as the main reason for its decision.

“The South African LCV, and in particular the double-cab market, is extremely well developed and competitive with locally manufactured brands and nameplates dominating sales,” said Craig Roberts, MD of Mazda South Africa.

It’s quite likely, then, that Stellantis is hoping that producing the Peugeot in South Africa will help to drive up its appeal to local buyers as it could reduce costs and bring greater peace of mind with regards to spare parts and after-sale support.

In addition, the carmaker is planning to expand on the Landtrek’s line-up to widen its customer base.

At an event earlier this year, it was revealed that the bakkie would be getting new single-cab and lower-spec manual double-cab variants as alternatives to the upmarket double-cabs already on sale.

“Today we have a very limited range of two variants of the Peugeot Landtrek available for the South African market, with the localization of the Peugeot Landtrek we will expand both model and powertrain line-up, and certainly look forward to being able to compete in the very competitive South African pickup market,” said Du Plessis.

Stellantis’ main goal is to reach a production capacity of one million units in the MEA region by 2030, and it expects that 40% of the Landtreks made here will be bought locally while the rest will be shipped to the Middle East.

TopAuto also probed Stellantis on whether the company had considered any other models for domestic manufacture, such as the Peugeot 208 and Opel Corsa which are a big hit overseas, but it was stated that there is already sufficient production capacity for these models.