Chinese automaker BAIC blames complications arising from the Covid-19 pandemic, contractor disputes, and the Russia-Ukraine war for the delays in setting up a new factory in the Coega Special Economic Zone in the Eastern Cape.
BAIC – short for Beijing Automotive Industry Corporation – announced in April 2016 that it was establishing a new factory on local soil in partnership with the South African Industrial Development Corporation (IDC).
The Chinese state-owned automobile manufacturer and the IDC established what is known as BAIC South Africa, the former retaining 65% stakeholding in the business venture and the latter 35%.
BAIC South Africa broke ground on the R11-billion manufacturing hub later that same year, but since then, the going has been rather slow.
The first spanner thrown in the works was by the original contractor who failed to meet their contractual obligations, and was subsequently
The CEO of BAIC International told Newzroom Afrika that the next roadblock came in the form of the Corona virus. At the time, economic activity around the world ground to a halt due to varying levels of lockdown restrictions, with the company unable to continue its work unaffected.
The “global and environmental changes” that arose after the pandemic, referring to the Russia-Ukraine war that further complicated supply chains and parts availability, brought more delays.
“To promote the construction of the plant, we have conquered a lot of difficulties,” the CEO said.
BAIC South Africa announced in mid-2023 that it had begun production on the first units of the Beijing X55 crossover for local and export markets at the Coega facility, missing its deadline by a cool five years, and that everything was up and running smoothly.
However, a BusinessDay who journalist toured the 70,591m2 facility on foot in July 2024, at which point it had already produced over 3,000 vehicles, described it as a “neat, well-invested but quiet facility with a skeleton staff.”
A reported 106 people are working there at the moment, but few of them were present when the factory tour took place.
This was allegedly a result of low levels of demand for the Chinese crossover in the domestic market. Once sales start increasing it would be necessary to bring more hands on deck, the company explained.
Render of the BAIC South Africa factory. Source: The People’s Map of Global China
Market revelation
While BAIC South Africa might already be producing cars at Coega, things didn’t particularly go to plan.
At first, it started out building semi-knockdown kits (SKD), which are classified as partially assembled vehicles that are imported and fully put together on local soil.
The goal was to move over to complete knockdown kits (CKD), these being the building of a car from scratch, upon completion of the factory in June 2023, however, as of September 2024, it’s still only SKDs rolling off the production line.
Consequently, port delays and supply chain snarls mean that on some days there is no work to be done at the BAIC plant, and no workers to be seen.
Initial projections showed that BAIC wanted to already be churning out as many as 50,000 CKDs per annum with around 60% to be shipped north into Africa, but it has fallen far, far short of this objective.
The Foton Tunland G7 is set to start production at the BAIC plant in 2026
The automaker seems to have come to grips with the challenges of the South African market, however, and it is working to secure the future of its Eastern Cape factory.
Deputy Director Ben Fouche told Financial Mail that Coega’s next optimistic landmark, which is to build 100,000 CKDs a year by 2027, is “simply not feasible.”
He said BAIC has spare capacity at the factory to produce vehicles on behalf of other carmakers and it is open to doing so, should an opportunity arise.
It is also expanding the factory to accommodate the Tunland G7, a bakkie sold by BAIC subsidiary Foton, starting in 2026.
BAIC now intends to reach a capacity of 10,000 over the next two years so as to unlock a range of state-supported benefits as part of the country’s Automotive Production and Development Programme.
It is also awaiting approval from BAIC International to start assembling CKDs of the X55.
“It’s very hard for new companies to kick-start successfully in such a tight environment without some support,” said Fouche.
“Should BAIC South Africa start to benefit from these incentives, it will become more viable to start and increase CKD production.”
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