The establishment of BAW (Beijing Auto Works) South Africa, a subsidiary of the Beijing Automotive Industry Holding Company (BAIC), will mark the first ever instance of direct Chinese investment in the South African light motor vehicle industry.
Beijing Auto Works produces a range of vehicles including Jeeps for the Chinese military, LCVs, SUVs, minibuses and medium commercial vehicles. Its establishment in South Africa is being widely touted as a boon to the local minibus taxi industry by providing the industry segment with a selection of cost-effective, safe and reliable vehicles.
BAW South Africa via its shareholders (BAIC at 51 per cent and the Industrial Development Corporation (IDC), and China Africa Motors (CAM) holding the remainder) will establish a production plant in New Era, Springs. This facility will will produce taxis on a semi knocked-down (SKD) basis but with a final line identical to that of completely knocked-down (CKD) manufacturing plant. It’s a development that will reportedly usher in an investment of R196 million and initially employ 496 people.
The firm will initially appoint 30 dealerships, growing to around 45 with 5 dedicated service centres, in major metropolitan centres. Once this network is in place and production is better establlished, BAW’s local arm will reportedly create and create more than 1 000 new jobs.
John Jessup, head of sales and marketing at BAW South Africa, notes that the establishment of the company is a real automotive milestone for South Africa. “This enterprise brings with it new job creation and attractive product offerings in all major vehicle market segments, starting with the taxi market where we will be establishing many industry firsts in terms of servicing, financing and professional factory vehicle refurbishing. But, most importantly, this investment is an important indication of long-term commitment as opposed to ‘arm’s length’ importer/distributor agreements,” he says.
Jessup believes that there will soon be annual taxi replacement demand to the tune of 25 000 units in South Africa alone. Jessup predicts that a great dela of this demand will be met by BAW South Africa’s Springs factory, which will provide an initial annual capacity of 9 600 vehicles, but ramping up considerably once the facility moves into full CKD
According to Jessup, the taxis are just the beginning for the company. “We will also be entering the LCV, SUV and passenger car markets from next year,” he reveals, “although the decisions whether to fully import or locally assemble these models is still under review.”
