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Production to start at Chinese auto plant in Eastern Cape 'before end of 2019'

Feb 25 2019 19:02
Carin Smith

Production at Chinese automaker BAIC SA's vehicle plant in the Coega industrial development zone near Port Elizabeth will start "before the end of 2019".

This comes after the company said in July last year that full-scale production of its compact Sports Utility Vehicle would start at the plant in the fourth quarter of 2018.  

According to a statement issued on Monday, construction of the plant is making "steady progress".

The Industrial Development Corporation (IDC) has a 35% stake in the joint venture.  

New timelines have been established for the completion of the project, and a new work schedule has been adopted for all contractors on site. The principle contractor, BIDR, will commence construction activity in the second quarter of 2019.

According to CEO of BAIC SA Nemo Tian, full-scale production will commence upon completion of the assembly. Welding facilities and all construction is set to reach completion in 2020.

Challenges

"This is BAIC International’s first overseas project of this magnitude. We've experienced some challenges and have learned from them, with the support and guidance of our local shareholders," Tian said in the statement.

The project is well on its way to exceeding the targeted 35% SMME participation, the statement added. To date, the value of construction tenders allocated to SMMEs has been R44.1m. The annual production target is set at 50 000 vehicles.   

Tian said this would be a gradual process, which will come to effect in approximately three years from commencement of production, after which it will be upscaled to 100 000 vehicles per year. Of the locally manufactured vehicles, the intention is that 40% will be sold to the SA market and 60% exported to other markets, including other parts of Africa and South America.

Local suppliers

Although the automaker plans to continue importing parts from China, BAIC SA indicated it remains committed to also purchase parts from local suppliers. "This drive will intensify year-by-year to eventually meet SA requirements," the statement said. 

The company has already established a local suppliers procurement database with at least 100 companies listed. "The South African plant is part of the BAIC International's long-term globalisation strategy of developing a global market and SA market is quite fertile for a new brand like BAIC," said Tian. 

The BAIC SA dealership network is currently sitting at 20 fully operational dealerships around the country.

Fin24 reported in July last year that President Cyril Ramaphosa and Chinese President Xi Jinping hailed the opening of the BAIC auto manufacturing plant in the Coega industrial development zone as a milestone for the two countries' economies.

The BAIC joint venture was a confirmation of the real working partnership between the People's Republic of China and South Africa, Ramaphosa said at the time.

In September last year, major contractors halted work for more than a week, claiming they had not been paid millions due to them for work done.

baic  |  coega  |  port elizabeth  |  eastern cape  |  cars  |  auto industry
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