Ford could contribute ‘almost 2% to SA’s GDP in two years’

Ford will account for nearly 2% of SA GDP in two years once production of its new Ranger bakkie is running at full steam, Ford Motor Africa president Neale Hill said on Tuesday.  

Production of the new vehicle, and of its Everest sports utility offshoot, is due to begin in the third quarter of this year after a R15.8bn investment by the US parent company. However, it will take several months for production to ramp up fully. The company’s Silverton, Tshwane, vehicle assembly plant will have annual capacity to build 200,000 Rangers, up from 168,000 for the current model.

Hill, who was Ford SA MD before taking responsibility for the whole of Africa last October, was speaking in Silverton at the local unveiling of the new Ranger and Everest. The vehicles were imported for the occasion.

He said the Ranger investment had created 1,200 new jobs in the assembly plant and 10,000 at components suppliers. Of the R15.8bn, R10.3bn is being spent in Silverton and R5.5bn at suppliers. Late last year, Ford announced a further R600m investment in its Struandale engine plant in Gqeberha.

Before Covid-19 slowed vehicle demand and production, the SA motor industry was responsible for nearly 7% of GDP. That figure, however, included motor retail. Hill said Ford and its suppliers alone would approach 2%. He said they were already over the 1% mark.

Other companies, notably Toyota, Mercedes-Benz, Volkswagen and BMW, are also significant contributors to SA GDP. None, however, report local figures. Hill said he was unable to immediately put numbers to his 2% forecast. Ranger is built primarily for export, to over 100 countries. Hill said he expected the development of African free trade, through the nascent African Continental Free Trade Area agreement, to provide even more opportunities.

SA-made Rangers are exported primarily to Europe. For now, they are all powered by traditional internal combustion engines (ICE). Many European markets, however, will outlaw sales of new ICE cars and bakkies from 2030. There will be a five-year hiatus, during which customers may buy hybrid vehicles, using dual ICE and electric power, but from 2035, new vehicles must be all-electric.

Bakkie models usually have a life cycle of about 11 years, meaning a successor to this year’s Ranger will be due in about 2033. Ford SA officials have already confirmed that while the new model will be all-ICE at first, hybrid engines will be added later.

Hill declined to comment on finance minister Enoch Godongwana’s recent claim that Ford is considering a further multibillion-rand investment in an electric-vehicle factory, to meet post-2035 export demands. However, a company insider said: “Clearly, electric has to be part of our future here in SA.”

Ford, like other local motor companies, is waiting for the government to unveil an electric-vehicle strategy that will help companies determine that future. A white paper, due last October, is now expected — though not guaranteed — later this year. Hill said: “We urgently need clarity.”