Volkswagen South Africa has won a $US2 billion contract to supply its parent company with engines over the next six years, writes Dave Cumming.
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The contract will see the company ship 440,000 units by 2010. Initially, the deal involves five cylinder diesel units destined for the Hannover plant, where they will be fitted to LT panel vans but company officials have suggested petrol units for China may be manufactured at a later date.
An initial investment of about $35 million has been made to enable VWSA to manage the contract and it estimates the project will create about 250 new jobs. The first production target is 35,000 units a year from next year and South Africa will be the sole supplier of the diesel units to Hannover.
The latest component deal follows a $5 million contract to supply Hannover with catalytic converters last year. VWSA will also manufacture the new Golf Mark Five for export markets.
The latest deal means engines are now second only to catalytic converters on the list of South Africa’s component exports. Ford manufactures 1.3 and 1.6 litre RoCam engines for export at its Pretoria plant and shipped about 240,000 kits and fully built up units last year.
