Global automotive group Stellantis announced last week that it has signed a memorandum of understanding (MoU) with the South African government’s Industrial Development Corporation (IDC) and the Department of Trade, Industry and Competition (DTIC) to develop a manufacturing facility in the country.

Stellantis South Africa (SA) tells Engineering News Online that the MoU was signed by the three parties with the aim “to work together towards finalising a Stellantis local vehicle assembly plant solution for the local and export markets”.

“The current three-way MoU is to develop a solution at which stage a review by all parties on their involvement and/or investments will be decided and shared.”

For the IDC, the outcome of the business case will “largely inform” its decision on the nature of its potential investment in the operation in terms of “the quantum and equity consideration”.

The IDC is currently also a shareholder in the BAIC assembly plant in the Eastern Cape.

Stellantis sells the Jeep, Alfa Romeo, Fiat, Citroën, Opel and Peugeot brands in South Africa.

The company says it is currently reviewing various options in terms of the brands and models that would be most suited for production in South Africa, with the export market a key element of the localisation and business plan.

“More details will be communicated at a further stage.”

This is also true for the specific special economic zone currently under consideration for the location of the fully-built-up vehicle plant, as well as the anticipated yearly production volume.

Initially, only the production of internal combustion engine variants will be considered, says Stellantis.

“But with the relevant government support frameworks in place, there is no reason why future plans wouldn’t include new-energy vehicles, in which Stellantis is one of the global leaders.”

The target for first vehicle production is 2026, but Stellantis cautions that this is dependent on many variables.

“South Africa, with its advanced infrastructure, diverse economy, sophisticated capital markets, and developed manufacturing capacity, is the ideal location for any company aspiring to reach the continental market more effectively, both from a cost and logistical point of view,” Stellantis tells Engineering News Online.

“Regional production capacity will enable Stellantis' sales and market share ambitions for the Middle East and Africa.

“The manufacturing site in South Africa will be a new building block in our industrialisation strategy that includes the plan to sell one-million vehicles in the region by 2030, and will bring us closer to our customers’ needs in the region.”

But what about the energy shortages currently plaguing South Africa?

Stellantis says the business details being finalised between the MoU partners include discussions on energy, and “the challenges and changes ahead”. 

“Options such as alternative green energy solutions, in line with planned standard operating procedures, form part of the discussions to mitigate the current problems being faced in the country.”