Certain vehicles will be cut from the Mercedes Benz range, reports Karen Harverson
Mercedes Benz of South Africa, in keeping with local motor industry sentiment to cut production of low volume models, will no longer manufacture all Mercedes Benz ranges but stick to the C-class model and limited production of the E-class.
Production of the S-class and present E-class models will cease by November this year.
“We have the most complicated Mercedes Benz factory in the world and it’s just not viable to continue to manufacture the whole range of Mercedes Benz cars, the Honda Ballade cars, the Mitshubishi Colt and our heavy commercial vehicle range all under one roof,” said managing director Christoph Kspke, speaking at a press conference held at the East London manufacturing plant last week.
He said the United States — which produces 12- million units compared to South Africa’s 400 000 — was the most competitive producer in the world and the local market was hard pressed to compete.
“We are not Mexico with the world’s biggest market on our doorstep so the logistics of becoming a competence centre for fully built up vehicles is extremely difficult.”
Instead, Kspke said the salvation of the local industry lay in the component industry. “There are components in this industry which can be manufactured at world class standards and exported.”
The company will export more than R600-million worth of components this year such as catalytic convertors, gearboxes, aluminium components, jacks, alloys wheels and leather upholstery. “Our target in the next two to three years is to reach R1- billion in future component exports.” On the heavy truck market, he said international pressure was fierce. “Two years ago there were four competitors in the market — this has risen to 15 of which the US is the most competitive.”
He added that the price of trucks had been reduced by five percent in the past two years and would fall a further 4,5 percent in November this year.
The company is in the process of re-engineering and reduced its overheads last year by more than R283-million compared to 1989.
Production in 1995 has doubled to 41 800 units compared to 21 500 units in 1989. In the same period, employment dropped from 5 519 to 4 300.
“Having reduced overheads by R283-million, no further jobs are at risk, and we’ll now be attacking the systems and processes within the company,” Kspke said.
He forecasts the company will post an increase in rand turnover of more than 50 percent this year compared to 1994 with turnover expected to breach the R5-billion mark by year end.
“We have the third biggest turnover of all the Mercedes Benz operations in the world despite currency pressures and increased competition as a result of change in local content regulations,” says Kspke.