Beijing Automotive Works (BAW), a subsidiary of Beijing Automobile Industry Holding Company (BAIC) in China, and two local partners have invested R196 million in a new assembly plant in Springs to produce taxi vehicles for the domestic and sub-Saharan markets.
The plant was officially opened yesterday and will eventually employ 469 people but is expected to create more than 1 000 new jobs, including jobs created by suppliers and dealers.
John Jessup, BAW South Africa’s head of sales and marketing, said yesterday that the new semi-knocked down facility would transition to a completely knocked down vehicle plant with an annual capacity of between 40 000 and 50 000 units by about 2015, which would involve an investment of between R2 billion and R3bn.
“This [initial R196m] investment is an important indication of long-term commitment as opposed to ‘arms-length’ importer/distributor agreements,” he said.
Jessup said BAW SA would be extending its product range by introducing a light commercial vehicle, a sport utility vehicle and passenger car next year, probably through completely built up imports.
This is the second significant investment in South Africa this year by a Chinese vehicle manufacturer.
First Automobile Works announced in September it would be building a new R600m vehicle and truck assembly plant in the Coega industrial development zone.
BAIC, Chinas fifth-largest automotive manufacturer, has a 51 percent shareholding in BAW SA, with the Industrial Development Corporation (IDC) and China Africa Motors (CAM), the previous importer and distributor of BAW taxi vehicles into South Africa under the CAM brand, sharing the balance.
The IDC has acquired a 24.5 percent stake in BAW SA for R22.9m and will also be providing BAW SA with up to R98.6m in debt facilities.
Geoffrey Qhena, the IDC’s chief executive, said this partnership fell under the local bus, truck and minibus programme initiated by the Department of Trade and Industry in 2010, with the intention of facilitating projects supporting the development of the local medium and heavy commercial vehicle industry.
Economic Development Minister Ebrahim Patel said the investment supported the goals of the New Growth Path of increased industrialisation and shifting the country’s reliance away from imports of manufactured goods.
Patel said this investment and that made by Toyota in its Ses’fikile taxi line would from next year result in about two-thirds or 16 000 units of the annual demand for 23 000 new taxis, which since 2007 had been imported, being assembled in South Africa.
“This is a solid achievement over a short period,” he said.
Jessup said the plant would have an annual capacity of 9 600 units in the first phase and would ramp up to about 800 units a month over the next 12 to 18 months.