Johannesburg - China’s fifth-largest carmaker, BAIC (Beijing Automobile International Corporation), is set to invest R11 billion in a CKD (completely knocked down) vehicle manufacturing plant in South Africa.
The investment follows BMW last month announcing the investment of R6bn in South Africa after awarding a contract to its plant in Rosslyn in Pretoria for the production of the new generation BMW X3 for the domestic and export markets.
Lewis Lu, the business development manager at BAIC Investments, confirmed on Friday that BAIC would be investing R11bn in a vehicle manufacturing plant in South Africa, but indicated the location of the plant had not yet been confirmed.
“It might be in Durban, East London or Port Elizabeth,” he said. Lu said the plant would have a maximum annual capacity of 100 000 units and would commence production by the end of 2017.
He said the investment in the plant would be funded by BAIC and the Industrial Development Corporation (IDC) of South Africa, with the remainder funded by other unnamed finance providers. He declined to provide further details about the funding. An attempt to obtain comment from the IDC was unsuccessful.
Lu cut short an interview with Business Report, stating he was very busy and the reporter should call back in a few days. He added that he was unable to comment more about the project at this time, because BAIC just signed an agreement and needed time to prepare the details about the operation of the project.
Lu did not provide any details about the nature and scope of the agreement that had been signed. It is believed that BAIC will launch some fully built up imported car models into the South African market in August next year.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said the investment by BAIC into South Africa was not totally unexpected and a positive development in that it would assist in making the vision of the government for the automotive industry to produce 1 million vehicles by 2020 more achievable.
MORE CARMAKERS TO INVEST?
Vermeulen said there might be further automotive investment announcements, given the lower production thresholds of the Automotive Production and Development Programme. BAIC already has a presence in the South African market.
Beijing Automotive Works (BAW), a subsidiary of the holding company of BAIC, the IDC and China Africa Motors (CAM), the previous importer and distributor of BAW taxi vehicles into South Africa under the CAM brand, in 2012 invested R196 million in a new semi knocked down assembly plant in Springs to produce taxi vehicles for the domestic and sub-Saharan markets.
BAW SA is 51 percent owned by BAIC, with the balance held equally by the IDC and CAM.
Local assembly of BAW SA’s Sasuka 16-seater minibus taxi commenced in April 2013.
Tony Godycki, the plant director at BAW SA, said on Friday plans to transition the plant into a CKD operation at a cost of about R300m were still in progress and were being discussed at length with the IDC.
Godycki said there was no timetable yet for this transition, because feasibility studies on the way forward were still being conducted.
He said the plant was producing 300 taxi vehicles a month and BAW SA had about 3000 units in the market.
“We can produce up to 500 taxis a month currently on a single shift. We have kept volumes down, because demand is linked to end-user finance. If you do not have end-user finance, you will not sell taxis,” Godycki said.