BMW S.Africa's production down due to strike - CNBC Africa

BMW S.Africa's production down due to strike

Southern Africa

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Workers fitting parts in a car factory.

The company also announced that it had been ruled out of bidding for the production of a new model, which would have created hundreds of new jobs.

“We currently run at 24 hours a day and full capacity, so in order to add any volume, we would need to add jobs. To add a new model, it would’ve been a significant number of jobs if we had in fact got it. Unfortunately, the labour unrest has taken us out of the running,” BMW South Africa spokesperson Guy Kilfoil told CNBC Africa.

“Ultimately, what we’ve announced is that we’ve been taken out of consideration for the allocation of a new model. It’s not guaranteed we would’ve got it but certainly it would’ve been a second model, which we would have built alongside the three series. It would’ve come on-stream in the next two years.” 

The new Automotive Production and Development Programme (APDP), which was introduced earlier this year, has however assisted in increasing local production volumes. The programme is also based on a system of rebates, which can be claimed from exports.


“The APDP replaces the MIDP, the old incentive programme for the motor industry, a very successful one which led to companies like BMW and many others moving to an export model for their production in South Africa,” Kilfoil explained.

“The APDP is a replacement for that and what it tries to do is encourage an increase in local volumes and it certainly worked. We’ve gone from 50,000 units a year to 85,000 units a year, if we had in fact had a full year of production without any labour unrest.”

While the APDP has worked well so far, its continued success will depend on the country’s labour environment stability.

About 80 per cent of the 13,000 units of lost production had been allocated to the export market.

“The BMW Group’s been able to reallocate about two and a half thousand units to other plants in the network, which still mean’s it’s a net 10,000 unit loss for the group. Some of those are local cars, 8,000 expoted cars, that has an immediate effect on our bottom line,” said Kilfoil.

“It also has a secondary effect as well, because that’s 8,000 export credits we won’t get, making the imported cars that we bring in that much more expensive.”