Stellantis SA’s announcement that it may build two additional models at its planned Gqeberha factory has offered a much-needed glimmer of hope for the Eastern Cape’s embattled auto sector.
Stellantis SA chief executive Mike Whitfield revealed that the company was considering adding new models to be produced alongside the Peugeot Landtrek 1-ton bakkie at the R3bn factory.
One would be a new energy vehicle and the other an undisclosed nameplate.
Whitfield announced this at the company’s Media Connect event in Fourways last week to launch the new Opel Grandland.
Stellantis corporate communications head Deidre du Plessis said the revised business case would lead to changes in the project’s scope, cost and timeline, resulting in a delayed production start.
“As a result, the revised standard operating procedure date is expected to be in 2027,” Du Plessis said.
The initial date eyed was 2026.
Du Plessis said the groundwork stage of the project had been completed and handed over successfully.
“The revised business case is now being completed and will be immediately followed by the review and approval process.”
This would be carried out between Stellantis, the Industrial Development Corporation, the Coega Development Corporation, and the department of trade, industry and competition.
She said global automotive market conditions had placed tremendous pressure on the industry.
US President Donald Trump announced raised trade tariffs of up to 30%.
On July 1, Trump said in a letter to President Cyril Ramaphosa that he would subject SA to 30% tariffs from August 1.
The effect of the hikes would be felt first by vehicle manufacturers with export ties to the US, with knock-on effects on component exports in the Eastern Cape likely to follow.
“This has necessitated a review of the current project business case, with the objective of securing additional products to produce in the local plant from the start of production, to maximise the 50,000 annual volume threshold,” Du Plessis said.
“We believe it is prudent to complete the business case for the additional models before beginning construction.
“We understand that these additional products will require a change in scope for the manufacturing plant, as well as additional investments.”
Stellantis is a multinational motor giant which counts Jeep, Dodge, Fiat, Peugeot, Opel and Alfa Romeo among its brands.
The wheels are in motion at Coega’s special economic zone, where construction of the new plant has officially kicked off with land clearing and a building platform completed.
Stellantis SA and the IDC have a partnership in the project, with the corporation taking up a 49% stake in the joint venture.
The initial investment by the Stellantis Group is expected to create more than 1,000 jobs and a 30% localisation rate over five years.
Nelson Mandela Bay Business Chamber chief executive Denise van Huyssteen welcomed the announcement.
She said they were encouraged by the news as the Bay was home to several multinationals which assembled world-class vehicles and components in the city.
“We have a wide spectrum of automotive skills available in the Bay, which accounts for over 40% of the country’s automotive manufacturing employment.
“Furthermore, almost half of SA’s automotive component suppliers are based here, including two of the country’s biggest systems integrators.
“The Coega IDZ, with its ample industrial land and deepwater port, is well-positioned to handle the export of vehicles.
“Furthermore, attracting international investors like Stellantis highlights the potential of the Bay to become a strong manufacturing and export base on the African continent,” Van Huyssteen said.
She said it was vital that new investments in vehicle assembly plants represented completely knocked down manufacturing, which procured components produced by local manufacturers and goods and services from local indirect suppliers.
“The ecosystem around the vehicle assembly plants, which includes hundreds of direct and indirect suppliers, is where thousands of local jobs can be retained and created.
“Having export markets outside of SA is key, as simply displacing current local assemblers in the domestic market is not the solution.
“Total production volumes need to increase to ensure that the required economies of scale are achieved, making both vehicle assembly and vehicle components manufacturing sustainable.
“Now the domestic market is largely dominated by foreign-made vehicles, which displaces the volume of locally made vehicles.
“To maintain volumes and the jobs that go with it, exports are vital.”
Van Huyssteen said SA required trade agreements with Brics nations that prioritised the export of finished products, rather than merely extracting and exporting raw materials.
“We also need to collaborate with other countries in Africa to promote mutually beneficial trade, which also incorporates supporting one another to produce finished products, thus reducing reliance on imported products from outside the continent.
“Furthermore, the government needs to move fast and take action in addressing barriers such as excessive red tape and complex policies associated with doing business in the country.
“Government incentives need to be structured to level the playing field with competing countries with large economies of scale and to de-risk local investment.
“This is necessary to encourage new investment,” she said.
Coega business development executive manager Asanda Xawuka said they were aware of Stellantis’s intention to revise the SA plant’s business case.
“However, Coega is not privy to the details,” he said.
But, he said, they welcomed and celebrated the new developments.
“The construction of the building platform has been completed and Coega now awaits finalisation of the revised business case by Stellantis SA, as this may have an impact on the plant concept initially approved before Stellantis considering other vehicle models for manufacturing in SA.”
Economic development, environmental affairs and tourism MEC Nonkqubela Pieters said there had been ongoing discussions with Stellantis SA.
“The investment by Stellantis SA comes at the right time and is a positive vote of confidence for the Eastern Cape as an automotive hub of the province.
“With the current shifting trends and geopolitical tensions, the automotive sector is in a phase of transition.
“The investment reinforces our standing as a hub of investment during this period.
“The Stellantis project will have positive spin-offs in terms of jobs, skills transfer and localisation.
“This is a strong signal that global OEMs continue to have confidence in the Eastern Cape as a destination for long-term investment and innovation.”
The news comes as Mercedes-Benz SA halted production for six weeks in June and July.
The company said the production pause planned for 2025 had been extended as part of wider efforts to adjust overall output volumes.
Meanwhile, speaking at a special ANC provincial executive committee meeting in East London this week, party provincial chair Oscar Mabuyane described the auto sector as the lifeblood of the Eastern Cape, which he said was now under threat.
“A team led by comrade Parks Tau is working around the clock to negotiate a favourable trade deal with the US government as we speak.
“We are hopeful of a positive outcome because the 30% tariffs that the US is imposing on SA products are out of line.
“[This] moment of economic uncertainty demands a bold reconfiguration of the developmental architecture of our country and province.
“The US is an unreliable partner.
“We must strengthen our relations with our Brics partners and Asia to attract investors and open new markets for our products,” Mabuyane said.
The Herald
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