Name of the Project
Automotive investment projects.

Location
South Africa.

Client
Beijing Automotive Group Corporation (BAIC), BMW South Africa (BMW SA), Ford Motor Company of Southern Africa (FMCSA) and Volkswagen South Africa Group (VWSA).

Project Description
The BAIC plans to build a completely knocked-down-vehicle manufacturing plant in the 50 000 ha zone, which is linked with the Ngqura deep-water harbor, located near Port Elizabeth. The car manufacturer plans to export about two-thirds of its production, so access to harbours is critical.

The plant will produce passenger, multipurpose and sports utility vehicles, as well as bakkies, and will be rolled out in phases. The plant will have an initial capacity of producing 50 000 vehicles a year, ramping up to 100 000 units a year.

The project will be rolled out in two phases.

The first phase will have an installed capacity to manufacture 50 000 units a year and will include a body shop, paint shop and assembly line. It will produce small cars, small sports-utility vehicles and pick-ups – three of the most popular vehicles in South Africa.

Phase 2 will double production to 100 000 units a year.

BMW SA, FMCSA and VWSA are undertaking multibillion-rand investment programmes to increase capacity at their respective assembly plants.

BMW plans to invest R6-billion at its Rosslyn plant in Pretoria, Gauteng, to produce the next-generation BMW X3, which will be sold locally and exported to various countries. Production of the next-generation BMW X3 will replace the BMW 3 Series sedan, which will be allocated to other plants in the global BMW production network. The BMW Spartanburg plant, in the US state of South Carolina, will continue to produce the next-generation BMW X3.

The investment to build a completely new model at the Rosslyn plant requires the installation of new technology on the production line; lifting the roof to accommodate production of the X3, which is bulkier and longer, compared with the 3 Series; a revamp of the paint shop; establishing a new technical training centre and information technology backup centre; and building a new bodyshop.

The realignment of production at Rosslyn is in response to the continuing growth of the sports-utility vehicle (SUV) segment worldwide.

FMCSA is expanding production capacity at its South African manufacturing operations to meet growing local and international demand for the Ford Ranger.
The focus of the investment will be on further improving in quality and increased automisation, as well as to allow for the production of the Ranger Raptor, which will enter the South African market in 2019.

The Silverton plant currently has a 100 000-unit-a-year capacity. 

The investment will result in capacity increasing to 167 000 units a year.

VWSA has upgraded and expanded its Uitenhage plant to produce two new models for the local and export markets – the new-generation Polo and Polo Vivo.

Both models will use VW’s small car Modular Transverse Matrix platform, which is used to build various models – from a Saveiro half-ton pick-up to a small SUV – and feature new technologies and driver-assistance systems.

The investment will also result in the Uitenhage operation progressing from a predominantly right-hand-drive market to one also producing left-hand-drive vehicles in significant numbers.

With this investment, the plant will increase its capacity from the current 120 000 vehicles a year to 160 000 vehicles a year. A possible third model might also be built at the plant.

Jobs To Be Created
Not stated.

Value
BAIC plans to invest R11-billion in its manufacturing plant.

BMW SA plans to invest more than R3-billion in new state-of-the-art facilities and operations at the plant, and an additional R3-billion will be invested in suppliers, launch costs and the training of associates. In addition, BMW SA plans to invest R160-million to enhance production line speed at its Rosslyn speed.

FMCSA plans to spend R3-billion on its investment programme.

VWSA – R6.1-billion.

Duration
Construction of BAIC’s manufacturing plant is expected to be completed in the first quarter of 2018.

A timeframe for BMW SA’s project has not been disclosed.

The Ford Ranger Raptor will be assembled in South Africa from 2019.

The upgrade of VWSA’s Uitenhage plant was completed in September 2017, with the start of production of the Polo and Polo Vivo.

Latest Developments
VWSA launched its new Polo and showcased the R6.1-billion investment in its plant and new products on January 28.

The majority of the investment was on production facilities, local-content tooling, quality assurance and manufacturing equipment, as well as information technology upgrades.

Upgrades included a R564-million new press shop and 330 new robots for the body shop.

Maximum yearly plant capacity is expected to be reached with a three-shift operation of about 160 000 vehicles, in 2019.

The addition of a third shift will add another 300 employees to the assembly line.

Local content of the new Polo and Polo Vivo is 60%, with ongoing plans to increase this number.

As part of the investment Volkswagen has introduced the one-line concept, with the new Polo and Polo Vivo now built on one line. Traditionally, vehicles on different platforms are assembled on unique production lines. To build two completely different platforms on one line is challenging, complex and requires new training of employees.

The introduction of the one-line concept at Uitenhage has also introduced a new integrated logistics concept.

The strengthening of the rand has also reintroduced the possible production of a third model at the VWSA plant. VWSA MD and chairperson Thomas Schaefer is hopeful that a decision on the possible third model later this year.

He has said that VWSA is also “fighting” to bring a new engine variant to the plant.

He expects the decision to be made in the next six months.

Key Contracts and Suppliers
For BMW SA: Stefanutti Stocks (body shop construction).

On Budget and on Time?
VWSA initially announced an investment of about R4.5-billion; however, the total investment exceeded R6.1-billion, which was partially attributed to exchange rate fluctuations and the approval of additional plant investments.

Contact Details for Project Information
BAIC, tel +86 10 56630185 or email haojinyi@baicintl.com.
BMW SA GM group communications, Diederik Reitsma, tel +27 12 522 2525 or email diederik.reitsma@bmw.co.za.
FMCSA, Alisea Chetty, tel +2712 842 2707 or email achetty2@ford.com.
VWSA spokesperson Matt Gennrich, tel +27 11 911 2789, fax +27 11 911 2700 or email gennrich@vwsa.co.za.