From Creamer Media in Johannesburg, this is the Real Economy Report.
Sashnee Moodley:
Chinese vehicle manufacturer Beijing Automotive Group and South Africa’s Industrial Development Corporation has announced the establishment of a new vehicle plant, to be located in the Coega Industrial Development Zone, near Port Elizabeth.
Irma Venter:
The BAIC - IDC plant will be the first new car plant to be built in South Africa in 40 years.
At full capacity, the R11-billion joint venture plant will be able to produce 100 000 vehicles a year. BAIC will be the major shareholder, holding 65% of the venture. The IDC will hold the remaining 35%.
The JV will roll out in two phases.
The R4.25-billion first phase will have the installed capacity to manufacture 50 000 units a year.
This is expected to double in Phase 2.
The plant should reach its 50 000-unit capacity by 2022. The implementation of Phase 2 should be completed by 2027.
The first phase will include a body shop, paint shop and assembly line. It will produce a small car, small sports-utility vehicle and pickup.
BAIC has set a target of 60% local content for the vehicles to roll off the Coega assembly line, with the parts to be sourced from new and existing component manufacturers in South Africa.
Plans for the BAIC plant include the future construction of a supplier park in the Coega IDZ to facilitate parts supply to the assembly line.
Construction of the new plant, which will start in December, is expected to be completed in the first quarter of 2018.
More than 2 500 jobs will be created during the construction phase. Around 1 000 people will be employed in the plant during Phase 1, with another 10 000 jobs to be created throughout the automotive value chain.
The first BAIC vehicle to go on sale in South Africa will be the D20. This hatchback is undergoing homologation and should go on sale later this year.
BAIC intends to establish 25 dealers during its initial roll-out in South Africa, which it believes will cover 90% of the available market.
BAIC says the plant is central to the company’s global expansion plans, with exports from South Africa to flow to sub-Saharan Africa and North Africa, and also eventually Europe.
Sashnee Moodley:
Other news making headlines this week.
That’s Creamer Media’s Real Economy Report. Join us again next week for more news and insight into South Africa’s real economy.