German car manufacturer BMW is not ceasing its production in South Africa, Trade and Industry Minister Rob Davies said in Pretoria on Wednesday.
However, the country had lost out on a significant contract for BMW SA to build the new BMW model, as the company had frozen its local expansion plans because of strikes in the automotive sector.
Davies said he was scheduled to meet BMW SA officials later on Wednesday.
"I am seeing them to talk to them this afternoon. I received a letter from BMW in which they clarified that their concerns were not correctly reported," he said.
"They said there was no question of them discontinuing their operations in South Africa. They did say, however, that their possibility of competing for an additional model was jeopardised by the recent strike."
Davies said government was communicating with BMW, particularly to improve the investment climate in South Africa.
Earlier this month, BMW said strikes at its South African plant wrecked an opportunity to expand local production.
South Africa's auto sector was crippled for several weeks when factory workers and then parts manufacturers went on strike.
"Unfortunately, due to labour instability, we've lost the opportunity to compete for a new model coming up," BMW SA spokesman Guy Kilfoil told French news agency Agence France-Presse (AFP).
The company's headquarters in Munich would soon decide where in the world to send production.
"There's always a healthy competition between plants around the world to see who could produce it most cost-effectively," Kilfoil was quoted as saying.
"The ongoing strike action affects the reputation of South Africa to be a reliable partner for export."
The company currently has an assembly plant in Rosslyn, north of Pretoria.
The recently ended auto strike also affected the Volkswagen, Ford, Mercedes-Benz, Toyota, and General Motors plants. The sector contributes six percent to the economy.
The Retail Motor Industry Organisation said the strikes reduced vehicle exports by 75 percent last month. - Sapa