The R2 billion investment at the East London plant to manufacture the new W204 Mercedes Benz will not only create 2 000 new jobs but will also attract between five and 10 new suppliers to South Africa, says DaimlerChrysler South Africa chairman Hans-Georg Niefer.

Niefer, who announced a record growth for the seventh consecutive year with a turnover of R24,7bn - up 9,8 % on the previous year - urged the East London Industrial Development Zone to use the opportunity to compete with other centres to attract foreign suppliers.

"These are going to be new suppliers, who have not yet been to South Africa.

We also expect the majority of our existing suppliers to continue to supply parts and components for the new W204," said Niefer.

He said DCSA tried its best to bring global suppliers to South Africa.

"But we cannot force them to go to Gauteng, Port Elizabeth or East London."

He said DCSA expected suppliers to supply the plant with parts at competitive prices.

"If the ELIDZ wants to attract foreign investors it would have to be more competitive than other centres," he added. "Otherwise no supplier will come to the IDZ."

Niefer said the economic growth of China had already had an influence on suppliers' choices on where they invested.

"We have talked to some suppliers and asked them to invest in South Africa, but some have told us that they are going to China."

Niefer was, however, full of praise for the quality product produced by the West Bank plant.

"It is unbelievably successful and we can now compete on the same level with our sister plants in Germany," he added.

Responding to Finance Minister Trevor Manuel's Budget on Wednesday, Fritz van Olst, DCSA management board member for sales and marketing, said the higher tax rate on company cars would impact on luxury cars.

Van Olst, however, feels that the initial impact will be moderate.

"There will be a move by certain of our customers to other cost brackets when the rate of taxation on company cars starts in 2006."

Stefan Fischer, divisional manager for finance, said the financial success of DCSA could mainly be ascribed to the decision to produce the C-Class's successor in East London.

He said the greatest challenge facing the car group this year was to be prepared for the production of the W204 and to become more efficient.

Niefer said the contract would secure jobs and increase job creation.

"We have been given the contract to manufacture left and right hand drives but at this stage we still do not know for which markets or the volumes."