By Toby Reynolds
JOHANNESBURG, Feb 21 (Reuters) - Swedish truck manufacturer Scania said on Friday its new South African plant was a stepping stone for the company's growth in Africa.
The new plant would allow Scania, one of the most profitable manufacturers in the troubled truck industry, to more than double its production of heavy trucks and buses in South Africa to around 2,000 units, company officers said.
"We will see an increase here. We see the growth potential as very strong," Scania Group Vice-President Gunnar Rustad told Reuters at the opening of the plant.
South Africa's motor industry is enjoying its fastest growth in decades, aided by a government led scheme that offers tax rebates to shield the industry while it adapts to producing narrower ranges for export.
Rustad said the incentives, part of the country's Motor Industry Development Plan, had encouraged Scania to invest in the country.
Scania South Africa Managing Director Ulf Grevesmuhl said the new plant would enable production to increase from the 700 units made in South Africa in 2002 to cope with demand from neighbouring countries.
"We are convinced that South African industry will play an increased role on the African continent," he said, noting rising cross-border trade on the continent.
Scania's operations in Latin America exported trucks and components to Europe as well as supplying local markets to help it to outperform other truck manufacturers in 2002.
But Grevesmuhl said Scania's South African plant would focus at first on supplying neighbouring countries, aiming to win a 13 percent share of the regional market.
The 14-nation Southern African Development Community (SADC) started implementing a free-trade area in September 2000 with a target of reducing tariffs on all goods and services to zero by 2012.
SADC has a combined population of 200 million and gross domestic product (GDP) of $176 billion.
Scania currently holds between 15 and 18 percent of the South African market, but the new plant would spearhead the company's efforts to capture market share in Zambia, Zimbabwe, Botswana, Malawi, Mozambique, Namibia and the Democratic Republic of Congo, Grevesmuhl said.
"We are planning for dramatic increases in cross border trade -- and the associated road transport operations that, of necessity, accompany this trade," he said.
"We are also planning for increased demand for bus transport in South Africa and neighbouring states as the economic climate improves and per capita earnings increase," he added.
Scania increased exports from South Africa by more than 400 percent in 2002 to 269 units.
Worldwide, the company reported it had more than doubled net income in that year.