Mahindra is advancing its plans to upgrade its South African factory to capitalize on its surging popularity with local buyers.
TopAuto recently received confirmation from outgoing Mahindra South Africa CEO Rajesh Gupta that the company is looking to expand its operation at the Dube TradePort Special Economic Zone near Durban in KwaZulu-Natal.
Additionally, Bloomberg reported that the Indian carmaker is working with the Industrial Development Corporation to assess the feasibility of introducing completely-knocked-down (CKD) vehicles at its facility.
Mahindra currently produces the Pik Up bakkie from semi-knocked-down (SKD) kits imported from India. These kits are largely pre-assembled and are brought to South Africa for the final stage of production.
A move to CKD production would therefore mark a significant step up in operational complexity, which translates to additional skills training and job opportunities for locals.
This move would also help Mahindra to avoid the new tariffs under consideration by the government, which threaten to double the import cost of new vehicles in an effort to protect local manufacturers.
This upgrade comes at a time when South Africa’s automotive landscape is experiencing a dramatic shift, as Indian and Chinese brands are rapidly gaining favour with buyers while legacy brands are losing their competitive edge.
Mahindra is now among the top 10 best-selling automakers in the country, alongside established names like Toyota, Ford, VW, and Hyundai.
Its main rivals are other up-and-coming brands like Chery, GWM, and Suzuki, and expanding its local manufacturing presence could help Mahindra to strengthen its position against its competitors.
Renai Moothilal, CEO and executive director of the National Association of Automotive Component and Allied Manufacturers (Naacam), said Mahindra’s rapid rise locally makes further investment a natural progression.
“It is clear that there’s a very strong domestic consumer appetite for their products, and Mahindra’s been assembling vehicles in the SKD facility in KZN for about six or seven years now,” he said in an interview with The Money Show.
Naacam has been involved in discussions with Mahindra as it evaluates its production goals.
“My own organisation has been in several consultations with them over the years where they look to investigate how they can get to what we call CKD manufacturing and deepen the supplier base,” explained Moothilal.
New job opportunities for South Africans
Moothilal added that the CKD upgrade will have a notable impact on employment.
“If I could just put it in job terms, a CKD plant tends to support eight jobs for every one that you find in an SKD plant,” he said.
He also noted that the expansion will lead to improvements in skills, technology, and new business entrant opportunities, benefitting the South African supply chain.
“We’ve been investigating with Mahindra for a period now, and I think they should, by the end of this year, have some conclusion on where they’re going to take the CKD plans.”
Moothilal addressed concerns about the influx of new competitors, saying that they are unlikely to be a threat, particularly if they lack local production.
However, he did warn that the surge in vehicle imports is a problem.
“One thing is absolutely clear, and that is that South Africa has become very attractive for fully imported vehicles. Last year, we had a vehicle import penetration of close to 70%.”
This trend poses a long-term threat to the auto sector, where imports dominate the market and local manufacturers struggle, leading to a loss of jobs and lower demand across the supply chain.
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