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African market lure helps consolidate Rosslyn in BMW production network

27th November 2015

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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The BMW group will invest R6-billion at BMW Group South Africa’s (BMW SA’s) Rosslyn plant to produce the next-generation X3 sports- activity vehicle (SAV) for the local and export markets.

Rosslyn will continue production of the current 3 Series through its life cycle, with the first production changes at the plant scheduled for next year.

The 47-year-old plant has assembled four generations of the 3 Series sedans since 1994, with the sixth-generation model currently in production outside Pretoria.

BMW says 3 Series production will be allocated to other plants within the group’s global production network.

The Spartanburg BMW plant, in South Carolina, US, will continue production of the X3.

“The potential for Africa as a future market for exports, as well as [government’s] newly reviewed Automotive Production and Development Programme (APDP), enables South Africa to play a significant role in the manufacturing industry and the production of high-quality cars,” says BMW SA MD Tim Abbott.

“Our passion for perfection at BMW Plant Rosslyn has demonstrated that we are highly competitive within the
global BMW production network, in terms of both cost of production and quality.”

Abbott says the X3, with its space, higher ground clearance and growing global popularity, makes more sense for export to emerging African markets, such as Nigeria, despite lower sales in South Africa, compared with the 3 Series.

The expectation is that X3 sales will grow globally and domestically.

The BMW X range has proved to be “very desirable”, says BMW board member responsible for sales and marketing Dr Ian Robertson, who

is also a previous MD of BMW SA.

X-vehicles currently accounts for 28% of BMW’s total global sales, and the proportion is expected to grow to 33% in the near future.

“This realignment of production at Plant Rosslyn is in response to the continuing growth of the SAV segment worldwide and we will be expanding the X range in the coming years,” comments Robertson.

“At BMW Group, we constantly evaluate our plant allocation to ensure it reflects and accommodates market demand,” adds BMW SA chairperson and BMW management board member responsible for production Oliver Zipse.

“With the decision to produce the next generation of the BMW X3 in Rosslyn, we strengthen the position of South Africa in our global production network.

“It also follows our strategy that production follows the market.”

Exports, Local Content
With the US also producing the X3, BMW SA will shift its current export focus – with around 50% of the 3 Series going to the US – to other markets, such as Europe, Australia, Japan and Korea, says Abbott.

“We believe there is an oppor- tunity to increase the localisation of components when we start producing this car,” he adds.

Component suppliers to the X3 are largely based in the US, which provides the opportunity to bring a number of them to South Africa.

More than R3-billion will be invested in new facilities and operations at the plant, while an additional R3-billion will be allocated to suppliers, launch costs and training of the workforce.

Trade and Industry Minister Dr Rob Davies regards the German carmaker’s investment as a boost to government’s goal to position South Africa as a manufacturing hub for high-value consumer products.

“As we change production of the BMW 3 Series sedan programme, it is our expectation that the new- generation X3 programme will make a telling contribution to the long-term development of the sector through higher production volumes, local value addition and inclusion of previously excluded groups in the sector.”

Abbott says BMW SA will “go to the market” looking for local suppliers with strong empowerment credentials to participate in the X3 production process.

He adds that recent changes to the APDP will serve to strengthen the local automotive industry to 2020.

With the yearly volume threshold for government support reduced from 50 000 units, to 10 000 units, it means “that more companies will come in, which means more suppliers, which means South Africa will become more competitive”.

Production at the Rosslyn plant dates back to 1968, when Praetor Monteerders began assembling cars, using BMW engines and drivetrains fitted to Hans Glas sheet metal, pressed and shipped from Dingolfing, in Germany.

In 1973, BMW took over full shareholding and established BMW SA, with Rosslyn becoming BMW’s first manufacturing facility outside Germany.

In 2014, production reached 68 721 units, while exports increased by 17% to a record 61 735 units.

For 2015, production of around 70 000 units is projected.

Abbott says it is not yet clear whether X3 production will increase production volumes at Rosslyn, as this is dependent on global demand.

BMW SA directly and indirectly employs more than 42 000 people.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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