Make or Break Year for Volkswagen South Africa Amid Growing Industry Concerns
- Volkswagen South Africa warned that 2026 is crucial for its future, amidst uncertainty in local investment
- MD Martina Biene highlighted the urgent need for policy changes to safeguard the automotive industry in SA
- The potential closure of the Kariega plant poses a national crisis, risking jobs and local manufacturing viability
Justin Williams, a journalist at Briefly News since 2024, covers South Africa’s current affairs. Before joining Briefly News, he served as a writer and chief editor at Right for Education Africa’s South African chapter.
Source: Getty Images
EASTERN CAPE, KARIEGA - Volkswagen in South Africa (VWSA) faces uncertainty, with the company warning that 2026 could determine its future in the country.
VWSA's future in SA uncertain
VWSA directly employs about 4,000 people. Volkswagen Group Africa Chair and MD Martina Biene said she wrote to President Cyril Ramaphosa before Christmas, stressing that an investment decision from the parent company for the next project was critical this year. She said Volkswagen Germany was assessing whether investment in South Africa is economically viable.
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Biene said VWSA might have a business case, but other regions offered stronger prospects. She described the year as “make or break” for the company. She said urgent changes to automotive industry policy were needed, warning that South Africa would not achieve the targets set in the Automotive Masterplan 2035 (Saam). She stated that other original equipment manufacturers had raised similar concerns and that Volkswagen Germany wanted to see movement on South Africa’s automotive policies.
Biene said her letter to Ramaphosa followed multiple discussions with the Department of Trade, Industry and Competition (DTIC), including Minister Parks Tau. She said the interactions were cordial, but no action resulted, prompting her letter to the president. She added that while the president did not respond, the DTIC subsequently engaged with NAAMSA, the automotive business council, though she said she was not satisfied with the outcome.
Continue pursuing investment
Biene said she was determined to continue pursuing investment. She added that the Automotive Production and Development Programme (APDP) and Saam 2035 provided blueprints, noting that the country had not reached the expected vehicle production scale or domestic market growth. The MD said unions, suppliers and other stakeholders were aligned, and only government action was needed.
She stated that VWSA’s plant was the second smallest in the Volkswagen Group, ahead of Osnabrück in Germany, and could not compete on price with imported vehicles due to high costs and limited scale. Biene said India’s labour costs were already 50% lower than South Africa’s before recent automotive wage negotiations.
Biene noted that policy instruments other than tariffs could support investment and manufacturing, and she stressed her support for the African Continental Free Trade Agreement (ACFTA) as a growth tool. She cited the Chery takeover of Nissan’s Rosslyn plant as positive and said she awaited Stellantis and other manufacturers entering the market.
Source: Getty Images
Closure a national crisis
Parliament’s Select Committee on Economic Development and Trade chairperson Sonja Boshoff said the potential closure of Volkswagen’s Kariega plant in the Eastern Cape constituted a national crisis. She noted that President Ramaphosa and Minister Tau must engage immediately with Volkswagen and industry leaders. She added that delays in policy decisions threatened job losses, supplier confidence, and industrial decline.
Boshoff said the plant had supported manufacturing and exports for decades and warned that further closures would worsen unemployment and de-industrialisation. She called for the finalisation of critical industrial policy, including support for the Automotive Industry Master Plan, to protect local manufacturing and livelihoods.
Local production costs force Mpact to lay off 400 employees
In a related article, Briefly News reported that Mpact faces layoffs as 400 jobs are threatened due to uncompetitive local production costs.
The JSE-listed company, spun off from the Mondi Group over 10 years ago, is set to close in March 2026.
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Source: Briefly News
