Plans by multinational motor company Stellantis for a R3bn greenfield vehicle assembly plant in the Eastern Cape are likely to be delayed by another year as the group waits for the South African government to clarify automotive policy changes.
When Stellantis South Africa MD Mike Whitfield announced the proposed investment in 2023, he expected the plant, situated in the Coega special economic zone near Gqeberha, to start production in 2026. Then the starting date moved to 2027. Now Whitfield says it is likely to be 2028. “We have put the operation on pause,” he says.
The problem is that conditions in the South African motor industry have changed enormously since the original plans were drawn up, based on the 2021 automotive production & development programme (APDP). The terms of the programme were announced in 2018, before Covid and the influx of imported vehicles, particularly Chinese, upended the market.
The plant was originally supposed to build the Peugeot Landtrek bakkie. But that was when 90% of bakkies sold in South Africa were manufactured locally. Today the share is closer to 70%. Stellantis — whose other brands include Fiat, Citroën, Opel, Jeep and Alfa Romeo — is now likely to build at least three products there.
What they will be depends on the outcome of the government’s review of the APDP, which trade, industry & competition minister Parks Tau hopes will be completed in September. If it is, the idea is to start rolling out the amended programme by year-end.
We should be in a position in the next three or four months to know what we are going to do at Coega
The APDP and the overall South African Automotive Masterplan, under which it falls, are intended to double South African vehicle production and motor industry employment by 2035. As things stand, neither of these targets will come close to being met. Nor will a 50% increase in the value of local content in South Africa-made vehicles.
Among many issues, the industry wants the APDP review to address manufacturing and consumer incentives for electric vehicles, revision of the ad valorem tax under which almost every new vehicle is punished as a luxury item, whether vehicle manufacturers should be able to absorb production-based duty rebates into their pricing structure, and possible duty protection against cheap imports.
Whitfield says earthworks at the 34ha Coega site have been completed, in preparation for plant construction. Assuming Tau’s policy timetable is met, “we should be in a position in the next three or four months to know what we are going to do at Coega”.
Stellantis has said it expects the Coega plant to open with annual capacity for 50,000 vehicles — the minimum required for the full package of APDP incentives — before moving eventually to 100,000. The plant will be part of the group’s growing production network across the Middle East and Africa.
Besides cars and bakkies, Whitfield says the plant is also likely to build the three-wheeler, all-electric Fiat Tris delivery van, which will be introduced to South Africa, initially as an import, later this year.
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