Related Articles
Top Stories
Feb 13 2012 12:15
Miner Xstrata says it has brought forward maintenance on two furnaces to assist Eskom to save power.
Feb 13 2012 10:43
Although jobs were created, the economy is still 420 000 jobs short of the peak employment level before the 2009 global financial crisis, says Adcorp.
Feb 13 2012 07:58
Greek lawmakers have approved a new round of drastic austerity measures after a long day of street battles between police and protesters left dozens injured.
Uitenhage - Volkswagen (VW) SA has launched a new entry-level car in line with industry goals of boosting local component content in domestically-produced vehicles.
The Polo Vivo, priced between R100 000 and R150 000, was introduced to media at Volkswagen's Uitenhage plant on Tuesday.
The segment was vacated by Volkswagen at the end of last year, when the car maker withdrew the long-running CitiGolf model from the market.
Over 70% of the components used in the Polo Vivo are locally made. Nearly 90% of the interior components are also manufactured in South Africa.
"We have to increase the local content and price competitiveness of local cars," said Dave Powels, MD of Volkswagen SA.
The car manufacturing sector is under pressure from cheaper equivalent components produced in India and China, with South Africa ranking poorly in terms of cost competitiveness.
Powels gave the following example: Western Europe has a production cost base equal to 100 (base level), while China and India have cost bases of around 80. In comparison, South Africa's cost base is as high as 120.
Some of the reasons for the cost uncompetitiveness of locally-produced car parts is lack in the areas of skills, availability of good quality raw materials and access to new technology.
On average, the percentage of local content used in South African cars is about 40%. The industry is aiming to raise this to over 70% over the next couple of years.
Powels said that VW SA has invested R1.1bn over the past two years in increasing the cost competitiveness of local content.
This includes the establishment of five new car parts suppliers in Uitenhage. Meanwhile, Roger Pitot, chairperson of the National Association of Automotive Components Allied Manufacturers, told Fin24.com that the content localisation initiative had the potential to boost employment in the component sector by 60%.
Pitot said an obstacle in boosting local content was that the majority of local car makers are controlled by overseas parent companies.
However, he said local car makers had shown a willingness to work with the local components industry, especially since the Automotive Production and Development Programme has incentives towards boosting local content.
- Fin24.com