Vehicle manufacturer Volkswagen of South Africa (VWSA) will release up to 400 employees in a process of voluntary separation, says company spokesperson Bill Stephens.
The Eastern Cape based manufacturer will also close all of its production areas in the last week of February, as well as during the weeks before and after the Easter weekend, in April.
Stephens says the continuing worldwide financial crisis is having a "dramatic impact on the demand for vehicles, with practically all global markets showing a substantial reduction in demand".
A significant portion of VWSA's production is destined for export markets.
Therefore, the global situation will have a profound effect on the company's production volumes for export markets in 2009, says Stephens.
In addition, the current forecast for domestic vehicle sales in 2009 indicates an anticipated decline of more than 10% compared with 2008 figures, this after sales already dropped 21,1% in 2008 compared with 2007.
Stephens says VWSA "wishes to stress that this short-term reduction of demand will not lead to any changes in the company's medium to long-term strategy, which includes significant investment in new products and technology, and higher levels of local content over the next two to three years".
VWSA announced in November last year that it would invest R3-billion to renew its manufacturing plant in Uitenhage.
Volkswagen global head of production Dr Jochem Heizmann said at the time that this included the introduction of new production technology in body shop and vehicle assembly operations, and a new engine manufacturing strategy to supply both domestic and export markets.
He added that VWSA would review its number of production platforms from three to two, as it dropped the Golf/Jetta platform, which the company currently exports.
It is likely the two remaining production platforms will be the Polo and the CitiGolf, and eventually its replacement, but hopefully in higher volumes than what is currently the case.
VWSA MD David Powels said that both locally produced platforms would be for the domestic market, with one or maybe both destined for export markets.