China Makes Biggest South Africa Auto Investment in 40 Yearsby
BAIC to build facility with capacity of 100,000 units a year
Project to cost 11 billion rand; South Africa’s IDC is partner
A Chinese state-owned car manufacturer agreed to build an 11 billion-rand ($759 million) auto plant in South Africa, the biggest investment in a vehicle-production facility in the country in four decades.
The Beijing Automotive International Corp. plans to start production at the facility in 2018, International Chief Executive Officer Dong Haiyang told reporters in the southern coast city of Port Elizabeth on Tuesday. The plant will be built in partnership with South Africa’s state-owned Industrial Development Corp. and have a capacity of 100,000 units a year by 2027, he said at the the industrial development zone where the factory will be located.
“South Africa’s automotive industry has received a major shot in the arm with the announcement of the biggest greenfield investment in 40 years,” the companies said in a joint statement.
The announcement comes as a boost for South Africa’s car-manufacturing industry, which has been among the bright spots of an economy expanding at the slowest pace since a recession in 2009. The government’s auto-incentive program has attracted companies including Toyota Motor Corp., Ford Motor Co. and BMW AG to set up and invest in factories. The industry has the potential to boost production by almost 50 percent to more than 900,000 vehicles a year by 2020, the local producers’ group said in May.
About 60 percent of the BAIC’s South African plant’s output will be earmarked for export, initially to east, west and north Africa, Dong said. Vehicles could be sent to Europe at a later date, he said. The project will create more than 2,500 jobs, according to the joint statement.
The Port Elizabeth facility is BAIC’s first integrated auto-manufacturing plant outside its home market, Chairman Xu Heyi said in translated speech. The company is China’s fourth-largest automaker by sales, and manufactures models including FOTON and BBAC, it said in the statement. The company also has partnerships with Mercedes-Benz AG and Hyundai Motor Co. in its home market.
“South Africa is not the only place” that BAIC plans to start manufacturing vehicles, Wei Huacheng, a company executive, said in a translated response to a question from a reporter. “There are some other places we are considering. We have got ongoing projects.”
The South African plant will be constructed in two phases, with capacity of 50,000 units a year after the initial development, the companies said. That will double during the second stage. BAIC plans to produce four models at the site. The Chinese company will own 65 percent of the project, with the balance taken by IDC.