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Brakes on investment into the country may have been applied by some, but not the motor manufacturers.
Following hot on the heels of BMW’s recent R6bn local investment announcement, Ford Motor Company announced a R2.5bn investment to expand operations at its Silverton assembly plant in Pretoria to produce the all-new Ford Everest 7-seater SUV (sport utility vehicle) along with the new Ford Ranger that was launched at the end of last year. Importantly, the investment will also create 1 200 local jobs and give potential investors food for positive thought.
It makes sense to produce the Ford Everest locally. It does after all share the same engines, transmissions, engineering and driving dynamics as its locally built sibling, the popular Ranger. It will also share the same assembly line.
Mix that all into the pot, add a healthy dash of buyer interest and export opportunity and it doesn’t appear to be that tough a call, even if the investment happens to be an eye-popping R2.5bn.
The R2.5bn investment reinforces South Africa’s position as a strategic export base for Ford Motor Company as part of the car manufacturer’s growth strategy across the Middle East and Africa.
South African-produced Everest models, expected to come to market in the fourth quarter, will be sold locally and exported to markets across sub-Saharan Africa.
Ford is not alone in its chase of the growing SUV market on the continent. “The LCV (light commercial vehicle) is more buoyant than the passenger car, but the SUV segment has shown consistent growth over the last three to four years and is certainly growing the fastest,” Jeff Nemeth, president and CEO of Ford Motor Company sub-Saharan Africa Region tells finweek.
A large four-wheel-drive, off-road capable SUV, the Everest, was introduced to locals in September last year via two imported and higher priced 3.2-litre five-cylinder automatic diesel variants. Early days it may be, but average monthly sales have already surpassed 180 units.
With the introduction of an additional eight derivatives that include more affordable options spec’d with a 2.2-litre diesel engine, predictably Nemeth expects “a very significant increase” for future sales.
The Silverton plant, which joins Thailand, India and China as production hubs for the Everest, will be equipped to produce 10 000 Everests annually on a two shift capacity, and Nemeth says that their target is to fill that capacity.
Local content is something the Everest range will not be short on, even boasting Ford’s locally produced Duratorq TDCi diesel engines, which are built at Ford’s Struandale Engine Plant in Port Elizabeth.
“The Everest has a significant amount of local content, but one of the things we had to decide was whether we wanted to deepen our local content and tool up parts, or to start building faster. We made a choice to launch with a good amount of local content but not as far as we could go. So we will continue to localise as we go and through 2017,” Nemeth tells finweek.
Ford is pushing localisation on two fronts. One through increasing the company’s black-owned enterprise supply base, the other through bringing new technology and new commodity suppliers into SA.
Production of the tough SUV commences on local soil in the third quarter of 2016. But come the fourth quarter when the locally produced SUVs hit the domestic market, buyers will have a choice of ten diesel derivatives, both automatic and manual.
The Everest will also offer technologically advanced features such as adaptive cruise control, lane assist, park assist, blind spot monitoring, connectivity and infotainment normally seen in premium vehicles.
Unsurprisingly, it is the domestic market where the majority of Everest sales are expected to originate from.
Currently the two imported automatic models retail for R634900 to R698900 so expectations are that pricing will be south of those. But given the erratic rand, Nemeth is not making any predictions on pricing, which he says will be released in the third quarter.
