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VW South Africa looks to Asia, Latam as Europe shifts to EVs

FILE PHOTO: A Volkswagen logo is seen on one of the German automaker's cars in a street in Sydney, Australia

By Promit Mukherjee and Joe Bavier

JOHANNESBURG (Reuters) - Volkswagen's South Africa unit aims to develop new markets for its petrol and diesel cars in Asia and Latin America, its managing director said, as Europe restricts sales as part of a shift to electric vehicles.

Three quarters of cars produced by South Africa's auto industry, which accounts for 5% of gross domestic product and over 100,000 jobs, are exported, mostly to European countries.

But with Britain planning to ban sales of new internal combustion vehicles from 2030 and the European Union following suit in 2035, South Africa's government has warned of an existential threat to the sector.

Martina Biene, Volkswagen South Africa's new managing director, told Reuters the company's manufacturing facilities in the country do not plan an immediate pivot to producing electric vehicles.

Instead, it would partner with the company's Indian and Brazilian manufacturing hubs to produce petrol and diesel vehicles for countries in Asia, Latin America and Africa that will likely lag behind advanced economies in the shift to EVs.

"That is clearly our current strategy," she said in an interview. "I think by 2035 there will be production of electric vehicles in Africa ... but in the meantime we will export probably less to Europe than other countries."

Volkswagen South Africa produced over 129,000 vehicles last year along with more than 58,000 engines, mostly destined for exports.

Biene said the German automaker is also seeking to develop and exploit more of Africa's largely untapped markets.

That would focus on selling South African-manufactured petrol and diesel vehicles in most markets and imported EVs in countries like Mauritius, Cape Verde and South Africa as demand for more environmentally friendly cars picks up there.

South Africa's government last year proposed a set of measures to encourage electric vehicle manufacturing and promote EV infrastructure, but the cabinet has yet to adopt a formal policy for EVs.

It is seeking 128 billion rand ($7.42 billion) to fund a transition to EVs under a plan it is presenting at the COP27 climate summit currently taking place in Egypt.

($1 = 17.2532 rand)

(Reporting by Promit Mukherjee; Editing by Joe Bavier and Susan Fenton)