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Ford (F) to Invest $170M in South Africa for Everest SUV

Ford Motor Co. F announced that it will invest R2.5 billion ($170 million) in its Silverton Assembly Plant in Pretoria, South Africa. The automaker is making this investment in order to expand its operations in South Africa and to support the production of Ford Everest as well as the Ford Ranger, which was launched last year.

Ford also confirmed that this investment will help create 1,200 new employment opportunities in South Africa. Ford Everest is widely popular among customers for the capability and utility it offers. A seven-seated SUV, the vehicle features body-on-frame construction, intelligent four-wheel drive and an Advanced Terrain Management System. The automaker considers that the production of Everest in South Africa will enable it to make the vehicle more conveniently available to customers in Sub-Saharan Africa.

This investment of R2.5 billion will support Ford’s growth strategy in the Middle East and Africa. Moreover, it strengthens South Africa’s position as an export base for Ford.

The Silverton plant has an annual production capacity of 10,000 Everests. Production of Everest at the plant will start from the third quarter of 2016. The first vehicles for sale will be available from the fourth quarter.

The vehicles produced at the Silverton plant will basically be marketed locally and also exported across Sub-Saharan Africa markets. Ford Everest is also produced at other plants, including the AutoAlliance Thailand plant in Rayong, Ford’s Chennai plant in India and the JMC Xiaolan Plant in Nanchang, China.

At present, Ford Everest is imported from Thailand. The vehicle features a 3.2-liter five-cylinder Duratorq TDCi engine. In South Africa, it is available in two specification levels – XLT and the range-topping Limited. According to Ford, after production begins in South Africa, the vehicle will be available with a 2.2-litre Duratorq TDCi four-cylinder diesel engine, along with a wider range of specification levels. The new Duratorq TDCi diesel engines offer maximum fuel efficiency and better performance.

The $170 million investment will also support the new Ranger’s production. The vehicle is being produced at the Silverton Assembly at maximum capacity level. The Ranger also has relatively high domestic sales and export demand.

Over the years Ford has retained its focus on Africa with continuous investments and expansion. In 2008, the automaker invested R3.4 billion ($231 million) for the production of Ford Ranger. The vehicle is exported to 148 countries in Africa, the Middle East and Europe.

Zacks Rank:

Currently, Ford carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Federal-Mogul Holdings Corporation FDML, Cooper Tire & Rubber Co. CTB and Superior Industries International, Inc. SUP. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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FORD MOTOR CO (F): Free Stock Analysis Report
 
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