Chinese carmaker seeks to reassure the market despite missing deadlines and annual output
Chinese carmaker seeks to reassure the market despite missing deadlines and annual output
BAIC is confident its R11bn assembly facility at Gqeberha will deliver despite labour disputes and production delays that have caused the plant to operate at a fraction of its capacity.
Since building commenced in 2016, every stated deadline for the plant has been missed, including reaching annual output of 50,000 vehicles by 2022.
BAIC recently hosted a visit to the plant as it sought to reassure the market that progress was being made. A walkabout revealed a neat, well-equipped but quiet facility with a skeleton staff. We did not see many of the reported 106 employees, but the company said it expected to be in full swing with more staff once demand ramped up.
In a move that could help the factory get into top gear, BAIC subsidiary Foton plans to assemble commercial vehicles at the facility from 2026.
The brand, founded in 1958, is one of several Chinese brands sold in SA, but unlike its peers it has vehicle assembly facilities in the country. It markets the B40 SUV and Beijing X55 crossover — the latter being assembled locally.
It was a ground-breaking development in 2016 when the Industrial Development Corporation (IDC) — the institution that funds industrialisation projects in SA — entered into what was hailed as one of the largest Sino-SA projects. The IDC owns a 35% stake and BAIC the remainder of the R11bn project.
Asked about the delays at BAIC, the IDC said it was in touch with management at the factory and understood its view that production output be linked to market demand.
The SA government entered into the agreement optimistic that it would create jobs. Projections at the start of the project estimated that 10,000 domestic jobs would be created through the automotive value chain.
Initial plans for the 89,000m2 plant in the Coega Special Economic Zone (SEZ) included an assembly line, press shop, paint shop, offices, a body shop and a supplier park next to the factory housing small and medium-sized local component manufacturers to support the full-scale production.
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