Mahindra opens first assembly plant in South Africa

CAPE TOWN (Reuters) - Indian automaker Mahindra and Mahindra has opened its first assembly plant in South Africa, which it sees as a launchpad to export vehicles to the rest of the continent, the chief executive of its local business said.

The new modular assembly plant, which imports car parts and builds the final product, is located in the east coast city of Durban. It will have an annual capacity of 2,500 Pik Up trucks which could be increased to assemble up to 4,000 Mahindra vehicles each year.

India's top-selling utility vehicle maker will compete against rivals with existing plants in South Africa, whose export-focused auto manufacturing sector has attracted billions of dollars of investment from the likes of BMW, Ford, VW and Toyota to expand and upgrade factories.

"The last five years was a wonderful time for us," said Rajesh Gupta, chief executive of Mahindra SA.

"We could demonstrate growth which pushed us into the category of the top five fastest-growing OEMs (original equipment manufacturers) in South Africa," he said.

Gupta said the company would push to meet government targets of sourcing 40 percent of its components, measured in value, from local suppliers and thereby benefit from tax incentives.

The factory started trial production this month, with full production seen in July.

Gupta said other models, such as the Bolero SUV, could eventually be assembled in Durban and exported to sub-Saharan Africa.

Mahindra, which is the world's largest tractor maker by volume, was also considering introducing its tractors into the South African market.

"Anything that we try to do we will try to localise and assemble them," he said, adding that this could include construction equipment and heavy-duty power generator systems.

($1 = 12.4621 rand)

(Reporting by Wendell Roelf, editing by Louise Heavens)