VWSA CEO, Martina Biene, has spoken of balancing opportunity with incentives and risk as the company prepares for a year of many milestones.
Celebrations and sobering realities for Volkswagen
South Africa
VWSA CEO, Martina Biene, has spoken of balancing opportunity with incentives and risk as the company prepares for a year of many milestones.
From its success with the Golf 1 continuation programme, where the Citi Golf remained in production for decades after being discontinued globally, to some of the most memorable television ads in broadcast history, VWSA is one of South Africa’ s most established brands.
This year VWSA celebrates 75 years of operations in South Africa, and three decades of building Polos. Yet for all the milestones and achievements, there has also been sober reflection by its CEO.
VWSA is crucial to the Eastern Cape’ s automotive industry. The Kariega assembly plant has developed into a global small-car production hub for VW, setting several production records with the Polo and Vivo, including 167 084 units built in 2024. In total, technicians at the Kariega plant have been responsible for more than 2m locally made Polos since 1996.
Former VWSA CEO Thomas Schäfer is now the head of VW passenger cars at the company ' s headquarters in Germany. Schaefer has a deep affinity for South Africa, having spent years working in-country. But even goodwill at VW Group board level is insufficient if the business case for VWSA’ s production facilities no longer makes sense. That is the looming risk, as framed by the current VWSA CEO, Biene.
Globally, demand is for compact crossovers and SUVs, not traditional small hatchbacks like the Polo. It’ s why VWSA is preparing to retool for the Tengo in 2027, a new crossover version of the Polo, using the same platform and many common components and form factors.
Despite the excellence in supply chain, tooling, and technical staff competency at VWSA’ s Kariega plant, it does not guarantee future production. Biene has stressed that the government must rethink incentives and tax structures.
Unlike most of South Africa’ s other locally manufacturing OEMs, VWSA does not build luxury cars or high-margin double-cab bakkies. But it does pay an ad valorem luxury tax on its most important model, the Polo Vivo, which is effectively a budget car but taxed like a luxury good, with the thresholds triggering at R250 000.
Like other local automotive OEM leaders, Biene has questioned the logic of an ad valorem tax on entry-level vehicles such as the Vivo. This legacy government tax simply inflates prices for buyers who have the least ability to absorb new-car price increases, due to administrative costs.
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