Power problems stall Volkswagen’s expansion in South Africa

Volkswagen’s top executive in South Africa has expressed concerns that unreliable power supply is hampering the German carmaker’s growth in the country. Despite a recent two-month respite from the power cuts that have afflicted South Africa since 2008, a lasting solution remains elusive for the automotive industry.

Martina Biene, Chairwoman and Managing Director of Volkswagen South Africa, highlighted the issue during an interview in Gqeberha, near VW’s factory. “The overall power situation brings South Africa to an uncompetitive position in the automotive industry,” Biene said. “Isuzu, ourselves, and the Ford engine plant are all affected by load shedding,” she added, referring to the local term for power outages.

The uncertainty surrounding electricity supply stems from the poor maintenance of state power utility Eskom’s coal-fired plants. This instability increases operational costs at the South African facility compared to Volkswagen’s over 100 sites worldwide, making it challenging to secure additional investment. “My biggest competition is 113 other VW plants,” Biene remarked.

Although Biene welcomed the current lull in power outages, she noted that the 165,000-car-per-year plant in Kariega, Eastern Cape, had already spent 130 million rand ($7 million) on generators. The factory, soon to be VW’s sole producer globally of Polo hatchbacks, requires 14 megawatts of power to operate efficiently.

A visit from Electricity Minister Kgosientsho Ramokgopa brought no concrete results, despite discussions on potential solutions. Calls and emails to the minister’s office went unanswered. “Power is our biggest obstacle,” Biene emphasized in an earlier speech. Reflecting on the minister’s visit, she said, “He came, we fed him well, it’s great people are accessible, but there is no outcome.”

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