Volkswagen Group Africa (VGA) announced a historic milestone in 2024, exporting 131,485 Polo vehicles to Europe and Asia-Pacific markets, eclipsing its previous record of 108,422 units set in 2019. The achievement underscores South Africa’s growing role as a strategic manufacturing hub for the global automotive industry, bolstered by stabilising infrastructure and macroeconomic conditions. The Kariega manufacturing plant in the Eastern Cape province, formerly known as Uitenhage, has become the exclusive global exporter of the Polo model to 38 countries across Europe and Asia-Pacific since July 2024. According to VGA, these exports constituted 88% of South Africa’s total vehicle exports last year, reaffirming the nation’s position as a critical node in Volkswagen’s international supply chain.

Domestically, the Polo hatchback secured fourth place in its segment with 12,253 units sold, while the Polo Vivo—a model specifically tailored for South African consumers—dominated the market, selling 25,914 units. The Vivo’s affordability and durability have cemented its reputation as a preferred choice in a price-sensitive environment, reflecting Volkswagen’s adaptive strategy in emerging markets. Martina Biene, Chairperson and Managing Director of VGA, attributed the export surge to multiple factors, including reduced interest rates, consistent energy supply, and operational improvements at South Africa’s ports and rail networks. Speaking to Reuters on the sidelines of the Africa Mining Indaba, Biene noted, “There is a positive movement, although it’s not skyrocketing. The alignment of infrastructure enhancements and policy stability has created a conducive environment for manufacturing growth.”

South Africa’s automotive sector, which contributes approximately 4.9% to the nation’s GDP, has long grappled with systemic challenges, including chronic power cuts orchestrated by state utility Eskom. However, load-shedding suspensions since March 2023—due to unexpected improvements in Eskom’s generation fleet—have provided respite. Transnet, the state-owned logistics firm, has also reported incremental progress in alleviating port backlogs and rail inefficiencies, though full operational recovery remains a work in progress. Volkswagen’s African operations form part of a broader strategy to diversify production amid geopolitical uncertainties and supply chain vulnerabilities. The Kariega plant, operational since 1951, has evolved into one of the continent’s most advanced automotive facilities, employing over 3,500 workers and producing left- and right-hand drive vehicles for global markets.

The Polo’s success contrasts with slowing electric vehicle (EV) adoption in Europe, where regulatory pressures and consumer hesitancy have prompted automakers to extend the lifecycle of internal combustion engine (ICE) models. Volkswagen’s decision to prioritise Polo exports from South Africa aligns with this trend, leveraging the region’s cost-competitive labour and existing ICE manufacturing infrastructure. Despite these gains, the South African automotive sector faces persistent headwinds. Currency volatility, rising input costs, and geopolitical tensions in key export markets such as Europe could dampen future growth. Moreover, while Eskom’s recent performance has improved, energy experts caution that ageing coal-fired power stations and delays in renewable energy investments pose long-term risks to industrial stability.

Industry analysts suggest that Volkswagen’s export-led growth model may face competition from Asian manufacturers, particularly Chinese automakers expanding their footprint in Africa. However, VGA’s entrenched supply chain relationships and adherence to European emissions standards provide a competitive edge in premium markets. The record exports have broader implications for South Africa’s economy, where unemployment remains stubbornly high at 32.1%. The automotive sector supports an estimated 110,000 direct jobs and contributes over ZAR 200 billion annually to export earnings. VGA’s expansion has also stimulated ancillary industries, including component manufacturing and logistics, fostering regional economic development in the Eastern Cape.

Volkswagen Group Africa’s 2024 achievements highlight the resilience and adaptability of South Africa’s automotive industry amid complex global and domestic challenges. While infrastructure improvements and policy reforms have catalysed short-term gains, sustaining this momentum will require coordinated efforts to address systemic inefficiencies and attract further investment. As the Kariega plant continues to serve as a linchpin of Volkswagen’s global strategy, its success underscores the potential for African manufacturing to compete on the world stage.