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Oct 14, 2011

FAW South Africa to build $100m truck, car plant in Eastern Cape

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FAW South Africa (FAW SA) will start construction of a $100-million truck and passenger car plant in the Eastern Cape in the first quarter of next year, says FAW SA operations manager Mehdi Abbas.

FAW SA is a joint venture between a local company and Chinese vehicle manufacturer FAW, which owns the majority share in the local operations. China FAW will provide the funding for the venture.

FAW is number 197 on the Fortune 500 list, and last year recorded $44-billion in turnover, FAW SA MD Richard Leiter tells Engineering News.

FAW last year produced 2.54-million trucks and cars, and manufactures vehicles in China in joint venture with companies such as Volkswagen, Toyota and Mazda.

FAW is also to move to private ownership, and will go public in 2012, says FAW SA GM Liu Xia.

The Eastern Cape plant, which will be located on a 400 000 m2 site, will have an annual capacity of 5 000 trucks a year, ranging from smaller trucks right up to the extra-heavy beasts.

The plant will also produce light commercial vehicles and passenger cars, which FAW does not yet sell in South Africa.

Annual light commercial vehicle and passenger car plant capacity will be 30 000 units a year, and the product range will include single and double half-ton bakkies – more of the workhorse kind than the leisure kind – as well as sedans and hatchbacks.

FAW SA was to unveil its bakkie and passenger car range in South Africa at the Johannesburg Motor Show, which started on October 8, with sales of these vehicles kicking off in early 2012.

Abbas says FAW SA has inked a deal with the Imperial group to distribute the vehicles locally.

FAW SA currently has 18 truck dealerships in South Africa, but wants to grow this footprint significantly, he adds.

FAW SA has been selling trucks in South Africa since 1993, with current assembly, in modest numbers, taking place at its Ekurhuleni plant.

The aim of the new, expanded plant is to service not only the local market, explains Abbas, but also the African market, as well as, eventually, South America.

“South Africa and the rest of Africa are our number one priority. It is a widely held belief in Africa that South Africa has high standards and that it produces reliable, high-quality goods, which is why we chose South Africa as our export base. We believe Africa will be the world’s next growth engine.”

Abbas does not want to divulge local sales volumes.

Leiter notes, however, that Africa is an important market for the company, and that, for example, it delivered 80 buses to Zimbabwe earlier this year.

“We are looking at setting up a dealership in Harare.”

The company already has dealerships in some African countries.

Angolan FAW sales reached around 4 000 units last year.

Abbas says FAW SA has been locked in talks with the Department of Trade on Industry (DTI) on incentives for its proposed investment, but that nego- tiations are ongoing.

The DTI confirms these negotiations.

At its current numbers, the plant’s annual capacity will fall short of the 50 000 units a year required to qualify for incentives under government’s Automotive Production Development Pro- gramme, set to be implemented in 2013.

However, Abbas says the 50 000 unit threshold is “not a problem”.

The first vehicle is expected to roll off the assembly line at the Eastern Cape plant in 2015. The FAW SA Ekurhuleni facility will then become a parts distribution centre.

Edited by: Martin Zhuwakinyu
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