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BMW to invest R6bn to build next-generation X3 in SA

The Rosslyn plant

Tim Abbott

The current X3

Inside the Rosslyn plant

16th November 2015

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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The BMW Group on Monday announced that it would 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 would continue production of the current 3 Series through its lifecycle, with the first production changes at the plant scheduled for next year.

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

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

The Spartanburg BMW plant, in South Carolina, the US, would 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,” said 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, both in terms of cost of production and quality.”

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

The expectation was that X3 sales would grow globally and domestically.

The BMW X range had proved to be “very desirable”, said BMW board member responsible for sales and marketing Dr Ian Robertson.

Robertson was also a previous MD of BMW SA.

X-vehicles currently accounted for 28% of BMW’s total global sales, and was 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,” commented Robertson.

“At the BMW Group, we constantly evaluate our plant allocation to ensure it reflects and accommodates market demand,” added 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 would 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, said Abbott.

“We believe there is an opportunity to increase the localisation of components when we start producing this car,” he added.

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

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

Minister of Trade and Industry Dr Rob Davies regarded the German car maker’s investment as a boost to government’s goal of positioning 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 said BMW SA would “go to the market” looking for local suppliers with strong empowerment credentials to participate in the X3 production process.

He added that recent changes to the APDP would serve to strengthen the local automotive industry through to 2020.

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

Production at the Rosslyn plant dates back to 1968, when Praetor Monteerders began assembling cars, using BMW engines and drive-trains 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 of 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 was projected.

Abbott said it was not yet clear whether X3 production would increase production volumes at Rosslyn, as this was dependent on global demand.

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

 

Edited by Creamer Media Reporter

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