JOHANNESBURG (Reuters) -Volkswagen plans to invest 4 billion rand ($210.67 million) in its South African manufacturing plant in the Eastern Cape in preparation to manufacture a new SUV from 2027, it said on Tuesday.
South Africa is the largest automotive manufacturing hub on the African continent, hosting global brands such as Toyota, Isuzu, Volkswagen (ETR:VOWG_p) and Mercedes.
The German carmaker's statement said the investment will be used to upgrade facilities in various areas in preparation for the addition of a third model to its production line-up from 2027.
"As most global vehicle markets transition to electric vehicles, African markets like South Africa will continue manufacturing and selling vehicles with internal combustion engines (ICEs) for the foreseeable future," said Martina Biene, Chairperson and Managing Director of Volkswagen Group Africa.
This will be due to customer demand for ICEs and slow introduction of electric vehicles in these markets, Biene added.
European Union countries have committed to end sales of new CO2-emitting cars in 2035, while the U.S. will increase the share of fully electric vehicles they sell to as much as 35%.
The first phase of the Kariega plant facility upgrade will begin at the end of 2024 during the plant shutdown, Volkswagen said.
Volkswagen Brazil is leading the design and development of the new SUV, which in collaboration with Volkswagen Group Africa's engineering team, will be adapted to the local and continental requirements such as right-hand driving.
The carmaker did not reveal the name of the new SUV.
Volkswagen manufactures Polo and Polo Vivo models in the South African plant. It has invested 10.28 billion rand in the Kariega plant since 2011.
Biene said the new model might be sold in other African markets where Volkswagen has a presence. In addition to the new model, the carmaker will introduce its ID.4 test fleet in South Africa and Rwanda.
($1 = 18.9868 rand)