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Friday / 14 June 2024
HomeNewsBMW is pumping R4.2 billion into South Africa

BMW is pumping R4.2 billion into South Africa

BMW has announced that it is investing R4.2 billion into its South African operations over the next five years to gear up for building the next-generation X3 SUV in plug-in hybrid (PHEV) guise.

“It will be the first electric model produced in South Africa [by BMW] and this model will be exclusively manufactured here in South Africa for the world,” said Dr. Milan Nedeljkovic, member of the board of management of BMW for production and chair of the board of management for BMW Group South Africa, Moneyweb reports.

The factory will continue producing internal-combustion engines (ICE) for various next-gen X3 variants, too.

No support from above

Peter van Binsbergen, BMW Group South Africa and Sub-Saharan Africa CEO, said the subsidiary hasn’t received any special treatment from the government to produce new-energy vehicles (NEV) on local soil, and that it made a decision to go ahead as it “makes sense to do it, not because of any particular government incentive.”

There have been repeated calls to government from major automotive industry stakeholders to introduce NEV-friendly policies or risk losing the bulk of the country’s exports to key markets within the next 10 to 15 years.

NEVs and related components are subject to 25% import duties, while ICEs and their parts are taxed at 18%.

Most of the locally-produced cars are shipped to Europe, however, the region is planning to ban the sale of ICE vehicles as soon as 2035 which could see exports to the market drop by over 50%.

“We have been very clear that electrifying our local operations is part of future-proofing Plant Rosslyn because we see the European markets going electric. Since we believe in that, we gone and done it. That is what is important,” said Van Binsbergen.

BMW said this substantial investment into South Africa underlines its commitment to the country and secures the future of 20,000 employees who are directly and indirectly involved with the company.

Additionally, Nedeljkovic said the BMW Group has made a donation of R30 million to the United Nations Children’s Fund (Unicef), with which it has partnered to venture to primary and secondary schools within South Africa to educate learners in fields such as science, technology, engineering, arts, and mathematics.

“For 50 years, BMW Group South Africa has been practising sustainable development through social investment, particularly in education,” he said.

“We are honoured to have Unicef’s support as we inspire and mould a new generation of leaders that will continue the BMW Group’s success story in South Africa for the next 50 years.”

A short history of BMW in South Africa

Originally built in 1973, Plant Rosslyn was BMW’s very first outside of Germany.

Today, it is one of 30 production facilities around the world and is one of only three locations where the popular X3 is built, alongside another plant in the United States and one in China.

Rosslyn has not been producing the SUV for very long; in fact, the X3 has only been in production since 2018, as the plant was previously responsible for popular models such as the 3 Series sedan.

Before that, it churned out classics including the 325 and the 2000 SA, the latter of which was exclusively made and sold for the South African market.

The 3 Series was first introduced in 1983, and in the 1990s BMW added export models to its domestic portfolio and subsequently introduced a second shift to the workday.

Production of the four-door lasted until 2018, a third shift was added in the meantime, resulting in a grand total of 1,191,604 sedans making their way off the factory floor in the 35 years it was built there.

The decision to move from the 3 Series to the X3 was largely driven by market forces, as global preferences in recent years shifted towards the practical body type.

2023 marked the 50th anniversary of Plant Rosslyn, where BMW proudly announced that it had just finished creating the 300,000th example of the X3, which also means the facility has been responsible for an incredible 1.6 million cars since its inception.

Approximately 95.9% of all the vehicles it made were for export markets, while the remaining 4.1% went on to find a home somewhere in South Africa.

The bulk of the units were shipped to Europe and the United States, as such, about 80% of the vehicles made at Rosslyn are left-hand drive, underscoring the importance of its switch to NEV production.

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