Chinese vehicle manufacturer Beijing Automotive Group (BAIC) and South Africa’s Industrial Development Corporation (IDC) announced today the establishment of a new completely knocked down (CKD) vehicle plant, to be located in the Coega Industrial Development Zone (IDZ), Port Elizabeth.
The who’s who of the business and political world gathered at a spectactular catered event to mark the traditional sod turning ceremony. The accompanying media contingent reminded us of the masses of hacks that descended on Port Elizabeth during the 2010 FIFA World Cup – wonderful exposure for our fair town and renewed hope for citizens desperate for jobs.
BAIC is ranked 160th in the Fortune Global 500 and produced it’s first sedan in 1958 – the ‘Jinggangshan’.
The BAIC plant will be the first new car plant and the largest automotive greenfields project in South Africa in 40 years and is aiming to produce 100 000 vehicles per year when it reaches full capacity
The R11-billion joint venture (JV) plant consists of BAIC as the major shareholder, with 65% and the IDC holding the remainining 35%.
“We expect the BAIC automotive plant to become our gateway to the world,” said BAIC Chairman Xu Hayi.
“We are extremely excited to announce a deal of this magnitude and economic importance to the country,” said IDC CEO Geoffrey Qhena.
Qhena said the JV would roll out in two phases.
The R4.25-billion first phase will have the installed capacity to manufacture 50 000 units a year doubling to 100 000 in Phase 2.
The plant should reach its 50 000-unit capacity by 2022, anticipated BAIC Automobile South Africa JV chairperson Dr Haiyang Dong. The implementation of Phase 2 should be completed by 2027, according to current planning, he added.
The plant will be located on Skubbes Street, Coega on 47.3839 ha of land, under a covered area of 88 969.79 m2.
With the Port of Nqura only 4 kilometres away it looks like the Port of Port Elizabeth will not be getting the BAIC vehicles shipped through there – another blow for the beleaugured Port struggling to hold on to the Manganese Ore distribution.
BAIC has set a target of 60% local content for the vehicles to roll off the Coega assembly line, with the parts to be sourced from new and existing component manufacturers in South Africa.
Plans for the BAIC plant include the future construction of a supplier park in the Coega IDZ to facilitate parts supply to the assembly line.
Local component makers are to supply steel chassis components and assemblies, panel and pressed components, interior and exterior trim, wheels and tyres, automotive glass components, and electrical and electronic components.
Construction of the new plant is expected to be completed in the first quarter of 2018.
More than 2 500 jobs will be created during the construction phase. Around 1 000 people will be employed in the plant during Phase 1, with another 10 000 jobs to be created throughout the automotive value chain of suppliers and dealers.
The first vehicle to go on sale in South Africa will be the D20. The hatchback is undergoing homologation and should go on sale later this year. Prices of the hatchback range from 56 800 to 63 100 Yuan in China (R123 500 to R137 200 as at today’s Forex rate).
BAIC intends to establish 25 dealers during its initial roll-out in South Africa, which it believes will cover 90% of the available market.
BAIC chairperson Xu Heyi said the plant was central to the company’s global expansion plans, with exports from South Africa to flow to sub-Saharan Africa and North Africa, and eventually Europe.
Exports to Europe would have a focus on “new-energy vehicles”, said Dong Haiyang, President of BAIC International.
The investment forms part of 26 bilateral agreements – valued at about R94-billion – between South Africa and China signed by President Jacob Zuma and Chinese leader Xi Jinping in early December.
The IDC is partnering on these agreements in a bid to bring large-scale investments to South Africa to create jobs, increase exports and expedite economic growth while maintaining cooperation with China.
Five multinational vehicle manufacturers are already operating in the Bay region.
Recent investments in the motor industry in the metro include Volkswagen South Africa’s R4.5-billion expansion and FAW ‘s R600-million manufacturing plant at the Coega IDZ, along with continued investment by Ford South Africa in its engine plant at Struandale.
A BAIC subsidiary, BAW South Africa, opened a minibus taxi assembly plant in Gauteng four years ago.
Videos from the event:
BAIC Signing Ceremony
https://youtu.be/G32sgMwDEGw
BAIC Sod Turning IDC
https://youtu.be/3tIPu8XIXK8
BAIC Ballet
https://youtu.be/n2-aZNEqI4U
BAIC BJ80 Video Tour
https://youtu.be/J64FkgS2HTk
BAIC Senova X25 Video Tour
https://youtu.be/4Km84dkl480
Alan Straton
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