As expected, France-based motor company Stellantis plans to pin its initial South African manufacturing hopes on a bakkie. The company, whose South African imported brands include Peugeot, Citroën, Opel, Fiat, Alfa Romeo and Jeep, has confirmed that it plans to build the Peugeot Landtrek from 2026 at the Coega special economic zone, east of Gqeberha in the Eastern Cape.
In the first stage of the R3bn development the plant will be able to build up to 50,000 vehicles annually, the minimum number required to enjoy full incentive benefits under the government’s automotive production and development programme (APDP). Capacity will be increased later to 90,000.
One of Stellantis’s Coega neighbours will be Beijing Automotive Industrial Co (BAIC). That plant should have started production in 2018, reaching 50,000 capacity in 2022 and rising to 100,000 in 2027. So far, nothing has been built, though officials repeatedly say manufacturing is imminent.
Stellantis’s international production record suggests it will be more punctual. If all goes according to plan, plant construction will be completed by the end of 2025. The Stellantis and BAIC plants have much in common. Both are greenfield projects, both will manufacture vehicles from scratch, rather than assembling imported kits as some other companies have done, and both have the government’s Industrial Development Corp as an investor.
At the signing ceremony in Cape Town, trade, industry & competition minister Ebrahim Patel described the Stellantis decision as “a wonderful day for all South Africans”. He added: “This commitment from Stellantis to invest in our local motor industry highlights the success of our manufacturing sector policy, its capability and potential.”
This project reflects our focus and trust in South Africa as one of the most important markets in Africa and the Middle East
— Samir Cherfan
It won’t do Stellantis any harm either. Peugeot, Fiat and Opel vehicles have been manufactured in South Africa before but, as an importer since returning to this country, the group has struggled to make serious headway in the ultra-competitive new vehicle market. In August, Stellantis sold 265 vehicles to local customers — a poor return for one of the world’s biggest motor companies, particularly for its Peugeot brand, which used to be a major seller across Africa.
However, other companies have found before that becoming a local manufacturer company can do wonders for market share. Like most, however, Stellantis is likely to export most Coega production. Industry-wide, more than two-thirds of South African vehicle production is exported.
Coega, adjacent to a deep-water port, will join plants in Morocco and Turkey in building vehicles for markets across Africa and the Middle East. Stellantis’s regional COO, Samir Cherfan, says the group wants to achieve 22% market share across the region by 2030. He hopes 70% of those sales will be vehicles built in the Middle East and Africa, from combined Stellantis regional production of 1-million. For now, South Africa will be the only plant manufacturing a bakkie.
Cherfan adds: “This project reflects our focus and trust in South Africa as one of the most important markets in Africa and the Middle East. We believe in South Africa and we intend to develop industrially and commercially, bringing value to our customers.”
The Eastern Cape is already responsible for nearly half the vehicles manufactured in South Africa. The Gqeberha area is home to Volkswagen and Isuzu assembly plants, as well as a Ford engine plant, while Mercedes-Benz builds cars along the coast in East London, so Stellantis will find a deep-rooted components supply sector already on the doorstep. Stellantis says the aim is for South Africa-made vehicles to include 30% local content. The industry average is just under 40%. Under the APDP, this is intended to rise to 60% by 2035.
The Coega Development Corp reckons the first phase of the project will create 1,000 jobs. Longer term, it could create 1,800 jobs in the immediate vicinity and another 2,100 in the Eastern Cape.
The investment is an important step in the motor industry’s desire to extend its overall annual capacity. Patel says this currently sits at about 700,000. The Stellantis investment will take it a step closer to the desired 1-million.
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