Volkswagen SA exports dropped in the first half of the year compared with the same period in 2002, but are now back on track after the company focused on delivering vehicles to the Asia-Pacific region and not Europe, says Hans-Christian Maergner.

Volkswagen SA exports dropped in the first half of the year compared with the same period in 2002, but are now back on track after the company focused on delivering vehicles to the Asia-Pacific region and not Europe, says Hans-Christian Maergner.


Maergner, chief executive of the German multinational’s local subsidiary, this week said that there was a reduction of 3 000 units in the manufacturer’s exports in the first half of 2003. But now the transformation is over, the Uitenhage-based company expects to reach its annual target of 30 000 vehicles exported this year (in line with the 2000 figure).


He said that despite SA’s free trade area accord with the European Union (EU), South African vehicles exported to Europe faced a seven per cent import tariff. This made them less competitive against products from VW plants in Europe, which could sell into the EU market from inside the bloc, thus avoiding duty.


Freight charges from South Africa to Asia are currently similar to those from Europe to Asia. This meant that VWSA could compete effectively against its European counterparts, and was now the exclusive supplier into the Asia-Pacific region of the Polo and Golf models.


“Since 12 weeks ago we have re-routed these exports from Europe to Asia,” said Maergner.


CARtoday.com reported recently that VW SA’s annual vehicle exports are expected to be worth R4-billion this year, with an additional R2-billion in component exports. “The company expects this year’s export of 30 000 units to rise to 40 000 in 2004 - a potential boost in vehicle exports of 33 per cent,” reported this week.


Maergner also said that VW was bidding to enter the US market, although it would have to compete for the work against other VW plants, including a facility in Mexico, which enjoys duty-free access to the US market.


“It is an opportunity and the Polo might be an option for the US market,” he added.

He said that VW’s ability to export from SA was dependent on a growth of the local market, which was the “biggest challenge we face”.