Indian-owned motor company Mahindra SA, which assembles imported vehicle kits near Durban, hopes to turn itself into a fully fledged vehicle manufacturer using SA components and employing thousands of people.
In Johannesburg on Tuesday, parent company Mahindra & Mahindra signed a memorandum of understanding with the Industrial Development Corporation (IDC) to undertake a feasibility study on establishing a full-scale manufacturing facility.
Veejay Nakra, chair of the group’s global motor division, said future products could include electric vehicles (EVs).
He gave no time frame for development, saying everything depended on the study’s outcome. He also could not say where the factory would be.
Mahindra SA MD Rajesh Gupta said this was an exploratory operation. The company said: “No commitment has been made at this stage. The study will allow Mahindra SA and the IDC to make an informed assessment before any future decisions are taken.”
The announcement came days after some SA vehicle manufacturers voiced concern that vehicle kit assemblers were abusing government automotive policy meant to incentivise high-volume manufacture, job creation and the development of a thriving local components industry.
Manufacturers said a loophole in the 2021-35 automotive production and development programme (APDP) let kit assemblers access generous import-duty rebates. Full-scale vehicle manufacture, building from scratch, is known as completely knocked-down (CKD). Kit-based assembly is called semi-knocked-down (SKD).
Every company wants to industrialise. We have always talked of building volume step by step. The idea is definitely to make [CKD] happen but we will look into it carefully.
— Rajesh Gupta
Mahindra SA MD
Gupta said the company employed about 100 people. He said potential CKD manufacture was in the pipeline for some years. Since launching in SA in 2004 as an import-only brand, Mahindra had insisted that local assembly be driven by demand.
The SKD plant in the Dube TradePort industrial development zone north of Durban, has reached its monthly capacity of 1,000 vehicles. A nearby new SKD plant, with a capacity of 1,500, will open midyear.
Rushing into CKD manufacture was not an option, Gupta said. “Every company wants to industrialise. We have always talked of building volume step by step. The idea is definitely to make [CKD] happen but we will look into it carefully.” said Nakra. “Our intentions are very clear but nothing is guaranteed.”
Gupta said that Mahindra did not want to repeat the challenge of another company (he did not mention Chinese manufacturer BAIC by name) that built a CKD factory but did not yet have the production volumes to use it.
There is the added challenge that, to claim the full set of APDP production incentives, plants must build at least 50,000 vehicles a year. Mahindra’s immediate plan is to build 1,500 vehicles monthly at its new plant translates into an annual 18,000 a year. SA is Mahindra’s biggest market outside India.
Nakra said a CKD operation would supply export markets as well as SA. It is not clear yet what those markets might be.
The Dube SKD plant assembles workhorse Mahindra bakkies. In 2023, the Indian parent unveiled a Pik-Up similar in styling and performance to mainstream Japanese and European equivalents. Nakra said he hoped the new vehicle, which the group expects to broaden the Mahindra brand’s appeal considerably, would be built in SA, in addition to existing products.
If the Mahindra CKD plant goes ahead, it would be the SA motor industry’s tenth. Multinational motor companies BMW, Ford, Isuzu, Mercedes-Benz, Nissan, Toyota and Volkswagen have had plants here for years.
BAIC is the latest. Stellantis is due to join the party next year. It plans to manufacture Peugeot’s Landtrek bakkie. There are several bus and truck SKD operations around SA though they are not part of the APDP.
Heavy-vehicle production volumes are too low to justify significant investment in manufacturing or local components.
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