DAVID FURLONGER: Peugeot’s new great trek?

Multinational carmaker Stellantis intends to build up to 30,000 vehicles annually at its planned new South African assembly plant, with the option of turning it eventually into a “massive” operation.

The France-based group this month signed a memorandum of understanding with government’s Industrial Development Corp (IDC) to develop the plant, which it hopes will be ready by the end of 2025.

Stellantis brands imported into SA include Alfa Romeo, Fiat, Citroën, Jeep, Opel and Peugeot. Stellantis South Africa MD Leslie Ramsoomar says a decision on what to build locally is expected soon. “To begin with, this will be a single-model plant.”

He says the field has been narrowed down to two or three products, which he won’t name.

However, based on previous comments, the early favourite is Peugeot’s Landtrek bakkie. SA is a recognised global centre for bakkie production, with Ford, Isuzu, Nissan and Toyota all exporting models. A site for the Stellantis plant also has to be confirmed. However, since it plans to export up to 60% of production, Ramsoomar says it will need to be close to a port. That narrows the field to Durban, East London and Gqeberha, which already have motor companies and components suppliers.

Samir Cherfan, COO of Stellantis’s Middle East and Africa activities, says the SA plant will complement existing regional ones in Morocco and Turkey. It will be “a new building block in our industrialisation strategy that includes a plan to sell 1-million vehicles in the region by 2030”. The idea is to source 70% of that from the three plants. Neither of the other two builds Landtrek.

It’s not clear what will happen to the existing Peugeot car plant in Walvis Bay, Namibia, which was “opened” in 2018 but is not producing anything. SA was one of its target markets but Ramsoomar confirms nothing has ever been delivered.

Last year, Stellantis expressed interest in a proposed, multibrand IDC assembly plant in SA that would build vehicles for about five companies — saving each of them the multibillion-rand cost of setting up individual operations.

Joy Balepile, the IDC’s head of automotive and transport equipment operations,  says the idea is still on the table for other companies and that “a considerable number of brands have shown interest”.

Ramsoomar says the newly announced plant will be controlled by Stellantis, with the IDC as a minority partner. IDC CEO TP Nchocho says: “An investment partner like Stellantis is an amazing opportunity for SA. Their track record in manufacturing plants around the world is impressive.”

The IDC will hope local progress is faster than that for its existing joint-venture partner, Beijing Automotive Industrial Co (BAIC) which, seven years after announcing an R11bn project to build cars and bakkies at Coega, near Gqeberha, still hasn’t started production. According to its 2016 plan, by now it should have capacity to build 50,000 vehicles annually, rising to 100,000 in 2027. The IDC is a 35% partner. The project has been beset by numerous manufacturing and labour issues, as well as the onset of Covid at a critical time but Balepile says “significant progress” has been made, notably towards the creation of a vehicle paintshop.

Ramsoomar says to begin with the Stellantis plant will build 20,000-30,000 vehicles annually. That will qualify it for some incentives under the 2021-2035 Automotive Production & Development Programme, but not the full suite, which requires a minimum of 50,000.

The plant will be designed in a way that will allow it to grow to match potential growth — what Ramsoomar calls “scalable manufacturing”. “We would like this eventually to be a massive plant,” he says.

Though exports will be important, SA production of a vehicle — making Stellantis a “local” company — won’t do it any harm here, either. Multinational motor companies like strong demand for vehicles in the countries in which they are built.

Ramsoomar says local market growth plans are on track but there’s no doubt they would welcome a boost. In the first two months of this year, figures from the National Association of Automobile Manufacturers of SA show that Stellantis sold 712 cars and commercial vehicles, from a total industry market of 89,434. The top seller was Peugeot, with 227 sales, including 48 Landtreks. Next came Opel (166), Fiat (154) and Jeep (127).