French vehicle manufacturer PSA Peugeot Citroën has decided it would be unviable to manufacture a right-hand drive version of its Peugeot 301 passenger car in South Africa, but has not abandoned its plans to manufacture vehicles in the country.
However, PSA Peugeot Citroën has started semi-knocked down (SKD) production of the Peugeot 301 in Nigeria with the aim of eventually moving to completely knocked down (CKD) manufacturing in that country.
South Africa’s Department of Trade and Industry (dti) has assisted the Nigerian government with the initiation of its automotive development programme, with former trade and industry minister Alec Erwin a consultant to the Nigerian government on this project.
Francis Harnie, the managing director of Peugeot Citroën South Africa, said yesterday that the Peugeot 301 produced in Nigeria would not be imported to South Africa, stressing it was only produced as a left-hand drive model and was only for the Nigerian market.
Harnie said the expected sales volumes in South Africa and right-hand drive neighbouring countries were insufficient for the Peugeot 301 on its own to qualify for the incentives available in terms of the Automotive Production and Development Programme (APDP) but the project had “not been buried”.
He said the Peugeot 301 remained a very interesting model for South Africa and its neighbouring countries but there would be market demand for only between 5 000 and 6 000 in South Africa and about 4 000 in neighbouring countries. The APDP has an annual production threshold of 50 000 units to qualify for incentives.
Harnie was hopeful the review of the APDP that was currently taking place would result in some changes, such as a reduction in the annual production threshold, which would assist PSA Peugeot Citroën to start producing vehicles in South Africa.
“I’m not involved in the [APDP review] discussions but know there is a demand from local manufacturers to reduce the volumes because I don’t think the 50 000 [unit annual threshold] is working.
“We are busy working on a lot of projects and also expecting some changes in the APDP that will help get us to the minimum volumes to get into the programme,” he said.
Harnie said the APDP had not brought any new vehicle manufacturing investors into the country in the about two years since it was introduced and the local industry was also not producing more vehicles.
“Some manufacturers are struggling. In my opinion from looking at the figures, what the government tried to do with the new rules of the APDP, I don’t think it’s working,” he said.
Harnie said PSA Peugeot Citroën could still start building cars in South Africa from 2016 but it was too early to talk about other models it could possibly produce in the country, together with or separately from the Peugeot 301.
He stressed The French car maker would not produce cars locally by making an investment in its own plant but through a contract manufacturing agreement with a local partner. Harnie confirmed it had been involved in discussions with more than one possible local partner but they had not yet reached any agreement.
He added that the first possibly temporary step towards local production could be SKD production but admitted SKD production of passenger cars and light commercial vehicles did not qualify for APDP benefits, which made this unviable.