BAIC has been assembling cars in South Africa since 2018. In the 2 000 days that have passed, the plant’s 300th car will roll off the production line. But is this really a cause for celebration?
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In 2015, the Chinese and South African governments, with former president Jacob Zuma in attendance, signed an agreement to have BAIC (former name: Beijing Automotive Industry Corporation) build cars in South Africa. To be more precise, in the Coega business district just outside Port Elizabeth, now Gqeberha. President Cyril Ramaphosa attended the plant’s official opening in July 2018, with the first car, the D20, leading the charge.
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At the time, the D20 was one of the most affordable cars in the country; its local assembly aimed at making it attainable to many. Later, the X25 joined the D20 as the two locally assembled BAIC vehicles.
Hair-raising situation
However, upon visiting the factory in 2024 it was abundantly clear that the plant, just down the street from Isuzu SA, has a different view or definition of production successes. According to BAIC South Africa, the firm will assemble its 300th car imminently. While this is a success for BAIC South Africa, Ford, as an example, produces 720 Ranger bakkies per day at its Silverton plant in Pretoria! In other words, around 200 000 bakkies per year.
To put BAIC South Africa’s situation into perspective: Between July 2018 and July 2024 is almost 2 200 days. A production rate of 300 cars over 2 000 days equates to 0.15 cars per day! Posed with the question of how the plant is profitable with such a low assembly count, the panel scuffled for 36 seconds before Mr Anele Geza, CFO of BAIC SA, boldly said:
“What we come with and what we showcase, and the competitive advantage we have as a manufacturer… The innovation, the intelligence that has fused BAIC has been impeccable for the organisation, which is yet to continue to grow, as it’s constantly growing in different markets.”
In October 2021, BAIC SA said its Coega-based facility “aims to produce 40 000 – 50 000 vehicles for local sales and export by the end of 2022.”
X55 making splashes
BAIC in China and South Africa’s Industrial Development Corporation (IDC) entered into a 65/35% partnership, with the Coega plant, assembling cars from CKD (complete knockdown) and SKD (semi-knockdown) kits. These were earmarked for the local market and export to African countries. However, six years on there is little to suggest that the rest of Africa will receive its SA-assembled BAICs any time soon.
Underlining the concern is that of the near-300 vehicles assembled, 282 units comprise the discontinued D20 and X25. Four years on from this discontinuation, the plant has now shifted its focus to assembling the X55 – South Africa’s 2023 “Best Family SUV” in the annual Car of the Year competition. According to BAIC South Africa, the plant, despite its mid-2023 completion, will produce the X55 when the firm’s China HQ gives the go-ahead. These will also come from CKD kits.
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Glancing over the production setup during the factory tour, several in-assembly X55s were on the production line, along with a handful of technicians. According to information provided by BAIC South Africa, it created more than 3 000 job opportunities since its establishment in 2016 and spent R637 million with 204 local suppliers in 2023.
As for the X55’s run in South Africa, the SUV is not doing badly on the sales front. Its popularity is on the increase, albeit incrementally, with 124 units finding owners in July 2024, and 114 in the month before. While the numbers are not shattering records, BAIC is confident that once local assembly starts in full swing the SUV’s popularity will increase.
BAIC and the R637m
Although BAIC is seemingly invested in the vast potential of the South African market, there are more questions than answers over what exactly is happening down in the Eastern Cape. It’s awkward hearing the manufacturer speak about milestones and future endeavours six years on from the plant’s official opening. Had it been any other local automotive manufacturer spewing glitter on a faltering production setup, heads would have rolled.
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There is also seemingly no rush from China to approve the plant coming into full operation. An assembly (note: not production) count of almost 300 units after six years is no reason for celebration, because how does this number justify the R637-million expenditure? Acquiring the tools and machines for assembly is one thing, but surely the purpose thereof is to assemble cars for profit?
Sadly, if BAIC’s Coega plant is supported financially by the Chinese Yuan, without urgency on the return on investment (ROI), six years on from the 2018 opening, then we’re likely to continue getting incoherent, half thought-through answers to pressing questions.
