BAIC produces a wide range of passenger vehicles, including the Senova X35 SUV pictured here. Image: Kim Kyung-Hoon / Reuters.

Johannesburg - The Coega Development Corporation (CDC) has signed a historic R11 billion investment deal with the Beijing Automobile International Corporation (BAIC) from China for the establishment of a completely knocked down (CKD) vehicle manufacturing plant in the Coega Industrial Development Zone (IDZ).

The signing follows BAIC committing in December to invest R11bn in a manufacturing plant in South Africa.

Mandla Mpangase, a spokesman for the IDC, confirmed to Business Report earlier this year that the first phase development of the plant would create a facility with a capacity to produce between 40 000 and 50 000 units a year, with the plant’s capacity doubling in the second phase.

Mpangase said the partners were looking to commence with the construction of the plant towards the end of this year or the beginning of next year.

What vehicles can we expect?

He said they were looking at a number of vehicle platforms in the plant, with the models produced earmarked for South Africa and the rest of Africa, with BAIC planning to enter the South African market this year with completely built up imports.

BAIC sells passenger cars under its own name, BAIC Motor, and also owns the Foton bakkie and truck brand, which is already represented in South Africa through Imperial. However, it appears as if the local factory will concentrate on passenger cars. “We’re looking at potentially sedans and SUVs,” Mpangase said.

A really big deal

Ebrahim Patel, the Minister of Economic Development, said in his budget vote speech in Parliament earlier this year that if the proposed establishment of a vehicle manufacturing plant by BAIC met the feasibility study criteria, it would be the first new light passenger assembly plant to be built in the country in more than 40 years.

The BAIC investment is an outcome of the Forum on China-Africa Co-operation (FOCAC) held in Johannesburg in December, where President Jacob Zuma and Chinese Prime Minister Xi Jinping signed 26 bilateral agreements valued at about R100bn.

10 000 jobs

The investment in the plant will be funded largely by BAIC and the Industrial Development Corporation (IDC).

It was previously estimated that 10 000 direct and indirect jobs would be created by the investment.

The department of trade and industry on Thursday described the deal as the biggest automotive investment in Africa in the last 40 years.

Trade and Industry Minister Rob Davies said the project positioned the Eastern Cape as an automotive hub and had the potential of deepening the component supply chain, job creation and economic development.

BUSINESS REPORT