An empowerment company has beaten off international and local competition to secure a contract worth up to R5m a year initially to make Volkswagen trucks and buses in SA.

The German multinational’s South African arm announced last year that it would start producing these vehicles in addition to passenger cars in SA.

Mzantsi Truck & Bus, which won the contract, is owned by 53 previously disadvantaged employees at Volkswagen. Most or all of the shareholders had been working for Volkswagen for more than 12 years, Volkswagen spokesman Songezo Zibi said yesterday.

Mzantsi was among nine bidders, including Volkswagen’s global logistics partner, Schnellecke of Germany, hoping to win the contract. The award was part of Volkswagen’s empowerment strategy.

Mzantsi is wholly owned by Abakhuseli Savings Club, one of several stokvel groups operating at Volkwagen’s Uitenhage car manufacturing plant.

Abakhuseli, which made a tidy profit on its Telkom shares last year, will provide the working capital for Mzantsi.

Volkswagen will invest about R300m in the development of the assembly plant and dealership network.

Zibi said Volkswagen would pay Mzantsi a monthly fee in terms of the production contract. In the initial stages, the contract would be worth between R3m and R5m, depending on the volume produced, Zibi said.

Bus production will start in the third quarter of this year, followed by truck production next year.

The plant at Volkswagen’s Uitenhage plant was “well advanced”, but equipment had yet to be installed, said Zibi.

The company is aiming to sell 200 buses and 800 trucks a year in SA within its first year, giving it a market share of 20% and 10% respectively.

The local market for these vehicles has grown in leaps and bounds over the past few years. Last year, truck and bus sales grew almost 32% over those recorded in 2004.

Zibi said that, to his knowledge, the award of the contract to a company outside the car maker was a first in the automotive industry in SA.

All of the 53 Mzantsi shareholders will retain their employment at the car company, with the exception of Vusi Mancapa, who has been appointed production manager of the new company.