Stellantis plans to build plant in South Africa

The maker of Jeep SUVs, Ram pickup trucks and other vehicles took a step toward building a new manufacturing plant in South Africa, the company said Wednesday.

Stellantis NV has signed a memorandum of understanding with the country’s Industrial Development Corp. and Department of Trade, Industry and Competition. It’s a step toward the automaker’s goal of selling 1 million vehicles by 2030 in Africa and the Middle East with 70% of production in the region.

(Left to Right) TP Nchocho, CEO of the Industrial Development Corp.; Ebrahim Patel, South Africa's minister of trade, industry, and competition; Malebo Mabitje-Thompson, acting director general of the DTIC; Samir Cherfan, Stellantis' Middle East and Africa chief operating officer; and Leslie Ramsoomar, Stellantis' South Africa managing director sign a memorandum of understanding for a manufacturing site in South Africa.

The plant is expected to be completed in 2025. In statement, IDC CEO TP Nchocho said the project would be a joint venture with Stellantis as it seeks to produce 1 million vehicles in South Africa. The plant will be in a South African Special Economic Zone, which can include access to free ports, free trade zones and other incentives.

The automaker declined to provide details like on the size of the investment and where the facility could be built. Stellantis CEO Carlos Tavares last week emphasized the strong results from Jeep and Ram in the region. Last year, Stellantis had 426,000 combined shipments to the Middle East and Africa, up 9.5% year-over-year, from products from German brand Opel. Its 16.7% adjusted operating income margin also was the highest of any region, resulting in $1.137 million in income for the year.

“We nearly doubled our profit against 2021, which demonstrates that there is a significant profitable growth potential in Middle East and Africa,” Tavares said on an earnings call last month. “And we have been making many, many decisions to improve the sourcing in Africa for Africa and the Middle East.”

Stellantis isn’t the only automaker investing in South Africa. In November, Ford Motor Co. launched production of the Ranger pickup following a $1 billion project at the Silverton Assembly Plant in Pretoria, the country’s administrative capital. Stellantis in November also announced a more than $300 million investment in a plant Morocco.

The South Africa announcement comes as Stellantis is evaluating its footprint elsewhere in response to the increased costs of electric vehicles compared to their internal combustion engine counterparts. Belvidere Assembly Plant in Illinois, home of the Jeep Cherokee, began idling indefinitely last week, affecting 1,350 workers.