Chinese car plant to boost local industry
by David Furlonger,
2015-12-07 05:51:33.0
A PROPOSED R12bn Chinese car plant in SA could make an important contribution to the domestic motor industry’s achieving its ambitious production goals, says Nico Vermeulen, director of the National Association of Automobile Manufacturers of SA.
It will also be the first major new manufacturer to enter the South African market in more than 40 years, joining BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota and Volkswagen.
Trade and Industry Minister Rob Davies announced last week that the local Industrial Development Corporation (IDC) had signed a deal with Beijing Automobile Works (BAW) to build BAW cars in SA. The R12bn deal was the largest in a package of South African-Chinese investment agreements totalling R94bn.
Apart from IDC CE Mvuleni Qhena’s saying the new plant would create 2,500 direct and 7,500 indirect jobs, few details of the project have emerged. Early betting, however, is that the plant will be in the Eastern Cape, where Volkswagen, Mercedes-Benz and General Motors all build vehicles and Ford has an engine-manufacturing plant.
Another Chinese company, FAW, has spent R600m on a truck factory near the Coega port outside Port Elizabeth. FAW has said it may eventually also build passenger vehicles. BAW already has a minibus-taxi assembly plant in Springs, east of Johannesburg. The IDC is also a partner there.
Mr Vermeulen said the new venture was "not entirely unexpected". It is no secret that several Chinese motor companies have been eyeing SA as a possible African manufacturing base. He said that with BAW now committed, others would probably follow.
It is believed the investment has nothing to do with Mr Davies’s recent announcement of changes to the government-administered 2013-20 Automotive Production and Development Programme.
From next year, the minimum annual production threshold at which motor companies will be able to claim incentives, will fall from 50,000 to 10,000. For R12bn, however, the new plant is expected to be capable of building well over 50,000.
Sources say the deal was agreed some time ago, but the announcement was delayed to coincide with last week’s state visit to SA by Chinese President Xi Jinping.
Local BAW officials have declined to comment, but it is understood the firm will start to import cars next year, to establish a market presence, while sources say construction of the factory may also begin next year.
Picture: THINKSTOCK
A PROPOSED R12bn Chinese car plant in SA could make an important contribution to the domestic motor industry’s achieving its ambitious production goals, says Nico Vermeulen, director of the National Association of Automobile Manufacturers of SA.
It will also be the first major new manufacturer to enter the South African market in more than 40 years, joining BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota and Volkswagen.
Trade and Industry Minister Rob Davies announced last week that the local Industrial Development Corporation (IDC) had signed a deal with Beijing Automobile Works (BAW) to build BAW cars in SA. The R12bn deal was the largest in a package of South African-Chinese investment agreements totalling R94bn.
Apart from IDC CE Mvuleni Qhena’s saying the new plant would create 2,500 direct and 7,500 indirect jobs, few details of the project have emerged. Early betting, however, is that the plant will be in the Eastern Cape, where Volkswagen, Mercedes-Benz and General Motors all build vehicles and Ford has an engine-manufacturing plant.
Another Chinese company, FAW, has spent R600m on a truck factory near the Coega port outside Port Elizabeth. FAW has said it may eventually also build passenger vehicles. BAW already has a minibus-taxi assembly plant in Springs, east of Johannesburg. The IDC is also a partner there.
Mr Vermeulen said the new venture was "not entirely unexpected". It is no secret that several Chinese motor companies have been eyeing SA as a possible African manufacturing base. He said that with BAW now committed, others would probably follow.
It is believed the investment has nothing to do with Mr Davies’s recent announcement of changes to the government-administered 2013-20 Automotive Production and Development Programme.
From next year, the minimum annual production threshold at which motor companies will be able to claim incentives, will fall from 50,000 to 10,000. For R12bn, however, the new plant is expected to be capable of building well over 50,000.
Sources say the deal was agreed some time ago, but the announcement was delayed to coincide with last week’s state visit to SA by Chinese President Xi Jinping.
Local BAW officials have declined to comment, but it is understood the firm will start to import cars next year, to establish a market presence, while sources say construction of the factory may also begin next year.
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