AUTO INDUSTRY

Mercedes-Benz South Africa (MBSA) is ramping up to start production of the C350e plug-in hybrid at the company’s Eastern Cape plant, says MBSA CEO and executive director for manufacturing Arno van der Merwe.

Van der Merwe says the C-Class hybrid –most likely the first hybrid to be produced in a South African plant – will be a big step in “deve- loping MBSA’s technical assembly capability”.

The C350e will be available on the local market towards the end of the year. It will also be exported from East London.

MBSA last year produced 106 700 vehicles. The C-Class made up 102 200 of this number and trucks and buses 4 500 units.

This is a massive jump from the 54 400 units assembled in 2014, made up of 48 100 C-Class models and 6 300 trucks and buses.

C-Class exports to more than 80 countries totalled around 93 500 units in 2015, up from the 33 688 units exported in 2014, when the plant was still ramping up production of the new C-Class.

MBSA production and export numbers both reached record highs in 2015, says Van der Merwe.

The East London plant benefited from an investment of R500-million in 2015, aimed at increasing production capacity by 25%. This adds to the R5-billion investment made from 2011 to 2015 to produce the new C-Class in South Africa.

The increase in exports, the fulfilment of a long-term strategy, provides MBSA with a hedge, “to a degree”, against a fluctuating rand, notes Van der Merwe.

He adds that every company in South Africa would like “some form of predictability and stability” when it comes to currency movements, as “dramatic fluctuations in short periods are difficult to manage and forecast”.

However, he believes that the weak rand also provides some opportunities for South Africa in terms of exports, which should flow through to other industries “in time”.

He confirms that MBSA is looking to acquire some land adjacent to its facility in East London as part of a strategic review of the plant’s layout.

He notes, however, that MBSA is not set to increase plant capacity again anytime soon.

Government and the local automotive industry are in talks to extend government’s Automotive Production and Development Programme (APDP) to 2035, says Van der Merwe.

Government’s support programme is currently scheduled to come to an end in 2020.

Van der Merwe says an extension of the APDP will provide “stability and investment security” to the South African automotive industry,

adding that there are “tougher times ahead” for South Africa and the local automotive industry.

He says it is important to have “a mid- to long-term view of the future” when deciding how to deal with South Africa’s current political, economic and social challenges.

“If you run a business always considering events on a week-by-week basis . . . you will find yourself running from one side to the other.”

He says MBSA, the local arm of the German Daimler group, remains committed to South Africa.

“We run a good business here and we are satis- fied with that business.”

However, he notes that it is also important “to create a future” in which investors can have confidence.

In light of the current tough economic environment and an industry forecast that the new- vehicle market will decrease by around 10% in 2016, Van der Merwe believes South Africa’s premium car market will experience “significant pressure” this year.

He hopes that MBSA’s car sales will be flat, compared with 2015, “with some pressure”.

“There are some headwinds. The premium segment will have a tough year.”

MBSA new-car sales reached 24 608 units in South Africa in 2015, compared with 28 370 units in 2014.

New models to be launched that will aid MBSA in its effort to retain sales this year are the new Smart, the C-Class Coupé, the GLS, the C-Class cabriolet, the S-Class cabriolet and the new E-Class.