Mercedes-Benz, the carmaker owned by Germany’s Daimler AG (DAI), said it would push ahead with a 3 billion rand ($302 million) investment plan in South Africa that will see it increase local output to 100,000 units a year.
The outlook for growth in Africa’s biggest economy is “very positive,” the truck and luxury carmaker’s South Africa Chief Executive Officer Martin Zimmermann said in an interview at the Johannesburg Motor Show Wenesday. The company will introduce new technology and a third shift to its local plant, which produces about 60,000 units a year at present, he said.
Bloomberg reports that Mercedes’s commitment to South Africa comes less than two weeks after Bayerische Motoren Werke AG (BMW), the world’s largest maker of luxury vehicles, said it would stop expansion in South Africa after labour strikes that shut down plants in August and September cost it 13,000 cars in lost production. BMW’s revised plans are a “worrying sign”, Finance Minister Pravin Gordhan said on Oct. 7.
Lost production from the strike would be recovered by Mercedes in six to seven weeks, Zimmermann said. “We have quite a significant order book,” he said.
South African vehicle sales will probably stagnate in 2014 as slower economic growth and the weak rand stifle consumer spending, according to the National Association of Automobile Manufacturers of South Africa.
“The economic indicators are just against us at the moment,” Naamsa Chairman Johan van Zyl said in an interview at the Motor Show. Vehicle sales would show “zero growth” next year after an estimated 5 percent advance to 650,000 units in 2013, he said.
The rand has weakened 15 percent against the dollar this year, the worst performer of 16 major currencies tracked by Bloomberg. South Africa’s central bank has downgraded its forecast for gross domestic product growth to 2 percent, which would be …