First Automobile Works (FAW), the Chinese vehicle manufacturer, is to invest R600 million in South Africa in a state-of-the-art truck and passenger car plant at the Coega industrial development zone (IDZ) outside Port Elizabeth in the Eastern Cape.
The investment, which is being jointly funded by FAW and the China-Africa Development Fund, is expected to create 500 permanent jobs in the Eastern Cape in the first phase.
Mehdi Abbas, FAW South Africa’s operations manager, said yesterday that R200m was being invested in the first phase to build a commercial vehicle production line with an annual capacity of 5 000 units.
Abbas said R400m would be invested in the second phase in a passenger vehicle line with an annual capacity of 30 000 units.
He said the first commercial vehicles were expected to roll off the line by the final quarter of next year, with construction of the passenger vehicle line commencing directly thereafter and expected to be operational in the second half of 2015.
He stressed the investment was based on using South Africa as an export base for other parts of Africa.
Abbas said commercial vehicles were currently exported directly from China to Angola, Tanzania and Kenya, where FAW’s annual sales were in excess of 3 000 units.
He said the R600m plant formed part of a $100m (R760m) investment in South Africa with the balance of the investment to be used to develop grassroots part suppliers.
Abbas’s comments coincided with a sod turning function in the Coega IDZ yesterday signalling the commencement of construction on the first phase of the project.
FAW SA is a joint venture between the FAW Group in China and local businessman Richard Leiter, the FAW SA managing director.
Abbas said FAW Group in China owned a majority shareholding in the local company, but declined to comment on the shareholding split.
He said sales into the South African market of a completely built up FAW sport utility vehicle, half-ton single and double cab bakkie and panel van would commence this year with distribution and retailing handled by the Imperial Group.
Abbas said FAW SA anticipated annual sales would total 1 000 vehicles a model.
He said FAW SA would push to achieve the 50 000 unit annual production threshold in the government’s Automotive Production and Development Programme and qualify for incentives under the programme after the first full year of operation at its Coega plant.
Ayanda Vilakazi, the marketing and communications manager of the Coega Development Corporation, said the investment followed the recent visit by President Jacob Zuma to China, where he signed bilateral trade and investment agreements between the two countries.
Vilakazi said FAW’s decision to invest in the Eastern Cape was prompted by Coega’s location, the proximity of the Port of Ngqura, the logistical solutions on offer, the availability of skills in the Nelson Mandela Bay metropolitan area and support mechanisms offered by Coega.