The investment of R4.5-billion by 2017 to produce two new Volkswagen (VW) models, announced this week, comes as South Africa's economy is going through a rough patch with the drop in China's demand for commodities and a weak rand, and it brings hope to a battling manufacturing sector. VW's Uitenhage factory, which is being expanded to accommodate the new models, is the biggest car factory in Africa. It produces between 39% and 73% of the components for its various local Polo models.story_article_left1Thomas Schaefer, the MD of VWSA, said on Thursday that although it had been difficult to convince the group to invest in South Africa given the history of labour unrest (although the company had not had a strike since 2001) and the economic outlook, the group saw great opportunities in Africa."People grew up with Citi Golfs and Beetles and the Polo," Schaefer said. "People love the cars, students love the cars. VW has always been about the technology and the good quality; people can actually drive it," he said, referring to the relative affordability of VW cars for middle-class consumers."We will invest in South Africa. A lot of things might speak against South Africa; we know all the arguments. A lot of companies might even pull out. We are not. We're here for the long run."VW, as well as competitor Mercedes-Benz, said the rand negatively affected imports; if it continued to deteriorate it would promote the localised supply of the business.Sanisha Packirisamy, an economist at Momentum, said that although a weaker rand should result in higher manufactured and mining export volumes, "soft global demand and sticky input costs" partly offset the benefits of a weak currency.Mercedes-Benz SA said that despite the decline in automotive sales in emerging markets, international sales were in line with its plans.story_article_right2"Through the transitional preparations made in 2014 in terms of ramping up to full production, we are still on track to manufacture and export record numbers of the new C-Class this year," said Asanda Fongqo, a spokesman for Mercedes-Benz SA.VWSA expects to export about 65945 cars this year, up from 54381 cars last year, while domestic sales are likely to decline. Schaefer said this growth in exports showed there was still demand for the product.VW opened a factory in Nigeria a month ago. Schaefer said growth in the automotive market in Africa might take time , but it would happen. Thirty years ago, people thought demand in China would not grow because of its "communist" ways; now the VW group sells millions of cars a year in China.Packirisamy predicted a modest recovery in consumer spending in the next three to five years as infrastructure development started picking up and electricity shortages were less likely to hit manufacturing, spurring investment and growth prospects."We still see opportunities for the South African automotive industry to grow. South Africa needs to focus on expanding its supply chain through exporting vehicle components and extending after-sales support in regional markets."..