DAVID FURLONGER: Merc’s R10bn East London investment is about to come to fruition

After seven years and 650,000 vehicles, Mercedes-Benz SA (MBSA) ended the manufacture of its old C-Class on May 15. The investment in its production facility will come to fruition when the first units of the new model roll off the production line, which is due to take place on Monday. The vehicle is also built in China and Germany, where production began earlier this year.

About 93% of C-Classes built in East London since 2014 have been exported to over 90 countries. CEO Andreas Engling says the new model will go to 110. So it’s no wonder he wants the local river port to match the efficiency of the vehicle assembly plant.

“We are not satisfied with the current status of East London harbour,” he says.

It’s a problem dating back many years. Now, as before, Engling wants Transnet to increase loading capacity and deepen the harbour so bigger ships can dock.

The state agency will have to go some to match improvements inside the plant. The paint shop, assembly line, warehousing and logistics have all been transformed.  The new body shop contains over 500 robots.

Other numbers are harder to come by. Engling says there was a “huge production dip” in 2020 before the plant “came back very nicely” in the first quarter of this year. So how many cars did it actually build and what volumes does it expect in 2021? What is the plant’s annual production capacity? Unlike other companies, which are happy to share the information, MBSA isn’t saying. In line with its German parent’s global policy, the SA subsidiary doesn’t share sales figures. 

One number it does share is local content in its vehicles – it’s “between 35% and 40%”. The government’s new motor industry policy, the SA Automotive Masterplan, due to be introduced on July 1, is intended to raise that to 60%. Given that MBSA imports its engines, one of the highest-value items in a vehicle, the company will struggle to reach the target. Engling says local content in the new C-Class will rise significantly, but “we don’t want to localise engines”.

Most of the previous C-Class cars contained traditional internal combustion engines, though some were hybrids, using a mix of petrol and electric motors. It’s a similar story for the new model. However, with signs that the government may finally be ready to follow through on promises to encourage the sale and manufacture of electric vehicles, local hybrid demand could rise.

Jörg Burzer, the global Mercedes-Benz group’s board member responsible for production and supply chain management, says: “The assembly line has very high flexibility. If necessary, it can do 100% hybrid.”

The very first car in SA was a Benz Velo, imported in 1896 – exactly 125 years ago. Mercedes-Benz cars have been built in East London since 1958. The first C-Class was assembled there in 1994. Burzer says the MBSA plant now employs about 4,000 people. The R10bn investment has created about 600 new jobs there and about 2,000 at components suppliers.