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A good year In spite of tough conditions, Volkswagen of South Africa has experienced strong consumer confidence and been awarded significant export contracts. Juliet Pitman looks back on a year of note

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n a clear message about the future, David Powels, Managing Director of Volkswagen of South Africa said a year ago, “We know where we’re going, we know what’s coming and we’re confident that we can meet the challenges ahead.” They were prophetic words, given Volkswagen’s achievements over what has undoubtedly been a difficult economic year for many South African businesses. In addition to emerging with strong new passenger car sales during the year, the company landed two new lucrative export contracts and invested substantially in its Uitenhage factory. Maintaining sales New vehicle sales are usually among the first casualties of an economic downturn in which households have less disposable income to make

big-ticket purchases. As South Africa Sales and Marketing Director, Mike Glendinning, explains, the new passenger car market continues to reflect a tough economy, as the impact of tight monetary policy, financial pressure on households and generally weaker economic conditions come into full effect. Yet in spite of this challenging environment, Volkswagen has maintained its strong position in new passenger car sales. In addition to placing the company ahead of its competitors, new passenger car sales show that while overall consumer confidence might be lower than in previous years, customer confidence in the Volkswagen brand remains strong. Biggest ever International confidence in Volkswagen of South Africa is also strong. In a coup for the company


and the South African automotive industry as a whole, Volkswagen of South Africa was awarded a R12 billion contract to supply the Volkswagen Group with Diesel Particulate Filters (DPFs) for the next five years. This is one of the biggest export contracts for a single part ever awarded to the company and can be partially attributed to Volkswagen of South Africa’s ongoing commitment to investing in world-class technology and the transfer of knowledge and skills. In delivering on the contract, the company will partner with Eberspächer South Africa, a local catalytic converter and exhaust systems manufacturer. Together, the two organisations are leaders in DPF manufacture, using a process known as calibrated stuffing which is the most modern, technologicallyadvanced manufacturing method. The new contract will create over 100 jobs and Volkswagen is committed to providing intensive training of all production operators and to ensuring that quality personnel have the necessary skills to meets the high international standards required on DPFs. As purchasing division head of Volkswagen of South Africa, Karlheinz Hell said at the

announcement of the new contract, “The decision to award the contract to Volkswagen of South Africa proves emphatically that South Africa can be globally competitive in terms of pricing and technology, even when measured against the best global players in the DPF industry.” Record export volumes Overall it’s been a good year for exports and by the end of 2008, Volkswagen of South Africa will have experienced a number of export milestones. These will be helped by a new contract to supply 10 260 fifth generation Jettas to Australia, New Zealand, Japan, Great Britain and Ireland. Powels pointed out that, in addition to the DPF contract, this contract was yet another opportunity to show the Volkswagen Group and its customers that Volkswagen of South Africa is capable of producing world-class quality products in its plant in Uitenhage. “This additional export contract is particularly welcomed during a period when volumes in the domestic market are under pressure from macro economic factors wellknown to us all,” he added. The contract comes off the back of the global group’s record 2007 sales, which put worldwide

production figures under pressure, and follows on from an additional order for 21 000 fifth generation Golfs and 8 800 Polos that will be exported to countries in the Asia Pacific region. “It’s a clear indication of the confidence that the Group has in the South African operation,” said Powels. Together, these export contracts will contribute to record export volumes which at the time of going to print were around 40 000. Looking to the future The new contracts also reflect the company’s commitment to developing an aggressive longterm export strategy for Volkswagen of South Africa, about which Powels says, “We are confident regarding the longer-term prospects for Volkswagen of South Africa as a volume manufacturer of globally competitive vehicles.” In addition, Volkswagen of South Africa will continue to boost its capacity by investing in the skills development and training of its employees, adding more employees to the hundreds who have already benefited from training at Volkswagen plants throughout the world.

In May this year the Volkswagen of South Africa factory produced its 100 000th fifth-generation Golf for the export market

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