Mahindra South Africa, a wholly-owned subsidiary of Indian conglomerate Mahindra & Mahindra, is set to enter a new growth phase this year and keep the localisation promise it made when it opened its first assembly facility in South Africa, in Durban, in 2018.
Mahindra SA CEO Rajesh Gupta said on Wednesday that when Mahindra opened its first assembly facility, it promised to expand its local investment and truly make South Africa a second home for the brand.
“In 2020, we will keep that promise with additional localisation efforts,” he said.
In 2018 Mahindra SA outsourced the semi-knocked down (SKD) assembly of its Pik Up bakkie range at an assembly facility based at the Dube TradePort special economic zone in Durban, next to King Shaka International Airport, to Automotive Investment Holdings (AIH) Logistics.
Mahindra and AIH jointly invested R10 million in facilities and equipment for the assembly plant, which was designed to assemble 200 Mahindra single and double cab bakkies a month – or between 2 400 and 2 500 a year – but could increase the volumes to 4 000 units a year with the addition of a second shift.
Gupta said as part of its campaign to localise as many components of its locally-assembled Pik Up range as possible, Mahindra last year hosted a team of engineers from its head office for a fact-finding mission.
The engineers met with first- and second-tier component suppliers in South Africa’s three main vehicle manufacturing hubs, with the aim of deepening Mahindra’s local sourcing in the new year.
“South Africa has world class component manufacturers and we hope to start sourcing more components, both cosmetic and technical, from here,” he said.
“While this may start with basic components, we trust it will evolve quickly to include more complex parts of the locally-assembled Pik Up.”
The Automotive Masterplan launched by the Department of Trade and Industry in 2018 envisaged local content improving from 39% to 60%.
The masterplan also envisaged employment in South Africa’s automotive manufacturing industry doubling to about 240 000 by 2035, vehicle production increasing from 600 000 to almost 1.4 million units, and setting a challenging empowerment target for the industry to achieve at least a Level 4 broad-based black economic empowerment (B-BBEE) status from 2021 to qualify for certain government incentives.
The B-BBEE requirements in the masterplan led to South Africa’s seven major vehicle original equipment manufacturers in November last year officially launching a R6 billion Automotive Industry Transformation Fund designed to support black participation in the automotive industry supply chain.
Gupta said the new growth phase Mahindra SA is entering this year will see it launch new and refreshed versions of almost its entire product range.
New wave of activity
He said this would also herald a new wave of activity at its assembly plant and its dealer network to support the model growth.
Gupta said this phase follows shortly after Mahindra was recognised as South Africa’s fastest growing brand for 2019.
Data provided by the National Association of Automobile Manufacturers of South Africa (Naamsa) show that Mahindra grew by 28.7% last year compared with the overall market decline of 2.8% in the same period, following Mahindra SA sales growth of 25.7% in 2018.
Gupta said that since Mahindra launched its first products in South Africa in 2004, its sales have grown steadily, fuelled by constant investment, new products and after-sales support through a growing network of dealers and awards from the media and industry bodies.
“While our growth has been organic and steady, it accelerated markedly after we opened our assembly facility in Durban in May 2018,” he said. “Since then we have seen a dramatic rise in interest in Mahindra and its vehicles.”
Gupta added that with a vehicle parc approaching 60 000 units, Mahindra SA is partnering with its dealer network to introduce a comprehensive after-sales care programme, backed by its well-established parts distribution network and a significant investment by the company.
This will help the brand to deliver a customer-centric homogeneous experience across its network, he said.