German auto giant starts production of Africa-focused SUV in South Africa after $241 million investment, even as it plans 50,000 global job cuts in biggest-ever overhaul

The Tengo will be the first Volkswagen SUV built at the Eastern Cape factory and its third model alongside the Polo and Polo Vivo.

The production launch follows a 4 billion rand ($241 million) investment announced in 2024 to expand the facility and tap into growing African demand for affordable sport utility vehicles. Based on Volkswagen’s Brazil-built Tera, Volkswagen Group Africa and Volkswagen do Brasil developed the Tengo specifically for African markets, according to Reuters.

Volkswagen said about 45% of the Tengo’s components will be sourced locally, supporting South Africa’s automotive supply chain and domestic manufacturing.

The investment programme includes new body-shop equipment, production tooling and manufacturing technology to accommodate the additional model. The Kariega factory produced a record 167,084 vehicles in 2024 and also supplies export markets beyond Africa.

The new model comes as Volkswagen faces intensifying competition from lower-priced Chinese automakers, particularly in South Africa, its most important market and manufacturing base on the continent. Porsche executive Christiane Zorn has taken charge of Volkswagen’s African business as the German carmaker navigates the changing competitive landscape.

Volkswagen’s African manufacturing ambitions come alongside a wider global restructuring, with the company planning to cut roughly 50,000 jobs worldwide.

However, its regional operations still aim to grow. Volkswagen Group Africa has dismissed reports that it plans to leave Rwanda, reaffirming its long-term commitment to the country while announcing an expansion of its local operations.