Harrismith vehicle plant not impossible, but improbable, say industry experts

24th June 2011 By: Irma Venter - Creamer Media Senior Deputy Editor

Reports on the establishment of a $1-billion Harrismith plant to assemble Chinese vehicles were met with disbelief by panelists at a Future Group automotive industry breakfast in Johannesburg on Friday morning.

Former McCarthy Group CEO Brand Pretorius said it was “highly unlikely in the short to medium term that a Chinese manufacturer would come to South Africa to establish a manufacturing facility”.

He said Chinese brands currently still lacked the local sales volumes necessary to reach the 50 000-units-a-year production threshold at which government incentives kicked in under the Automotive Production Development Programme.

The McCarthy group imports Chinese vehicles, such as the Chery brand, through a joint venture with the Imperial group.

Pretorius added that China still had 150-million unemployed people, and that the Asian giant’s “religion is economic growth. My opinion is that they will protect their manufacturing base. The argument to continue manufacturing 99% of vehicles for worldwide consumption in China is very compelling. They have the economies of scale”.

Pretorius said he was not condemning the possible development, but added that he had to consider “the real world. It is not impossible, but improbable”.

Associated Motor Holdings (AMH) CEO Manny de Canha reacted with the same level of skepticism, noting that the development was “virtually impossible”.

“Chinese brands take 10, 15 years to establish themselves. If it will happen, it will take 20 years”.

AMH is owned by Imperial.

East Rand-based Calibra Motor Corporation (CMC) announced earlier this month that it aimed to break ground on a greenfield vehicle assembly plant in the Free State by the end of this year, or early next year, with the first vehicle anticipated to roll off the assembly line in 2015.

CMC imports a variety of Chinese vehicle brands into South Africa. The current biggest sellers are 14- and 16-seater minibuses for the local taxi market.

The company imports and sells Xiamen King Long buses, coaches and minibuses, Huanghai bakkies, Lifan passenger cars, Foton medium trucks, and SinoTruck heavy-duty trucks.

The company noted that the Harrismith plant, set to produce taxis and bakkies, was to be a South African plant, driven and funded by South African-born individuals.