Soaring European demand for the new Polo is to benefit Volkswagen of South Africa's (VWSA's) Uitenhage plant, says VWSA MD David Powels.

The company is the global source of right-hand drive, four-door Polos, in a six-year, R30-billion contract.

However, VWSA has now picked up an additional six-month contract to export 17 000 left-hand drive Polos to Europe on the back of demand for the newly launched passenger car on the continent. The contract is valued at around R1,5-billion. This comes as the Spain plant is struggling to meet demand.

Powels says VWSA has also secured the contract to supply 100% of world Cross Polo demand, in both right-hand and left-hand drive versions, which should add another 12 200 units to the company's 2010 production tally.

The Cross Polo was launched in Geneva last week, with Uitenhage starting production two weeks ago.

These two contracts, one short term and one long term, will add to the 55 000 Polos the company is to export to right-hand drive markets this year, taking VWSA's total anticipated 2010 exports to 71 500 units, says Powels.

Adding the new Vivo, also produced at Uitenhage, but only for the local market, as well as Polo production for the South African market, vehicle production at VWSA is set to reach 113 731 units in 2010, up from 2009's 59 487 units.

Powels says VWSA has also received export contracts for 8 500 Polo engines from India, and 30 000 Polo engines from China this year.

Total VWSA engine production will reach 100 000 units this year.

The additional production demands at VWSA has seen the company employ 860 extra people for a six-month period.

The plant is currently working on a three-shift, 24-hour day.

VWSA invested close to R4-billion to implement its various export programmes.

Powels says he understands from government that the company will qualify for incentives under the Automotive Investment Scheme (AIS), which forms part of the Automotive Production Development Programme, which should mean a cash grant from government of roughly R750-million.

The AIS, still being fine tuned, will see between 20% and 30% of project value return to investors over a three-year period. The AIS is a form of grant to support investment in new plant and machinery in the automotive sector.