First Automobile Works (FAW), the Chinese vehicle manufacturer investing R600 million in a state-of-the-art production plant for commercial vehicles at the Coega industrial development zone outside Port Elizabeth, anticipates taking a decision within the next two years about expanding the plant to produce passenger vehicles as well.

FAW confirmed this when it launched the most affordable 1.3 litre car on the South African market at the Johannesburg International Motor Show yesterday.

The FAW V2 hatchback, which comes with a comprehensive range of features and service, warranty and roadside assistance plans, is being launched at a price of R99 995.

Jianyu Hao, the managing director of FAW Africa Investment, said the first phase of the commercial vehicle plant would be completed by the end of the year and production was scheduled to start next May, creating about 500 jobs.

The new plant is jointly funded by FAW and the China-Africa Development Fund.

He said FAW was still involved in negotiations with the Trade and Industry Department because it was difficult for a new car manufacturer to meet the threshold for incentives of 50 000 units a year.

Hao was confident about the South African market and believed it was the right location for its production base for the local and export markets. He said the plant would have to export cars because the local market was not big enough.

Pedro Pereira, the general manager, said the firm expected to sell between 50 and 100 V2 models a month through 22 FAW dealers countrywide.

South Africa is the first right-hand drive export market for the V2, which has been introduced to the market following a six-month local test and evaluation programme to ensure its suitability for conditions in the country. - Business Report