The Coega facility in Gqeberha where the Baic B30 will be manufactured. (Baic SA)
The government has recommitted itself to offering incentives to investors to ramp up local automotive production, which contributes about 5.3% to gross domestic product.
The undertaking by the department of trade, industry and competition comes in the wake of the multi-billion-rand South Africa-China partnership investment in the Eastern Cape’s Gqeberha BAIC SA assembly plant, which recently launched the company’s latest B30 SUV.
The government will support the industry through the automotive investment scheme (AIS) “if it produces completely knocked down kits in South Africa”, the department’s deputy director-general, Tebogo Makube, said at the launch, adding that BAIC could reap the benefits if it complied with AIS requirements by next year as planned.
The scheme is designed to grow the sector through investment in new or replacement models, with components that increase plant production volumes, sustain employment, and strengthen the automotive value chain.
It provides for a non-taxable cash grant of 20% of the value of a qualifying investment in productive assets by original equipment manufacturers and 25% of the value of a qualifying investment in productive assets by component manufacturers and tooling companies.
Makube said the country’s automotive investment programme was the biggest on the continent.
“We have the auto masterplan with a target of driving market share of about 1% global production of autos in the world. We are currently about 0.57% and we have the ambition of pushing the masterplan to 3035, making this kind of investment much-appreciated because it would help us achieve that ambition,” he said.
“With you selling directly to consumers, we want to deepen our local content, currently sitting at 40%, which we want to scale up to 60% by 3035 – creating employment. As a government, we are also directly involved in investment. Through the IDC [Industrial Development Corporation], we now have ownership of 35% of BAIC, making the entity a South African company.”
The partnership that we have with the government of China has led to an increase in bilateral trade, driven by investments such as this one, Makube said, adding, “Through this investment, we also want to drive transformation and enterprise development. Government is committed to providing other incentives to the industry, so that it can produce more vehicles in South Africa.”
Located in the Coega special economic zone, the BAIC SA assembly plant has been hailed as one of the most significant automotive investments in South Africa in the past 40 years — and the largest investment by a Chinese company in the automobile sector in Africa. The R11 billion venture was developed as a joint venture with the state-owned IDC.
Despite “initial setbacks” in the project, BAIC had stayed committed, Eastern Cape Premier Oscar Mabuyane said.
“Initial years were marked by disruptions — the global Covid outbreak, lockdowns and supply chain setbacks. Yet BAIC remained steadfast – continuing to invest and completing the construction of its world-class plant in Gqeberha in 2023,” Mabuyane said, describing the B30 launch as a reaffirmation of faith in South Africa’s manufacturing capacity, “and in particular, the Eastern Cape as being at the heart of our automotive industry”.
Chinese ambassador Wu Peng said the project reflected the dynamic economic and trade cooperation between the two countries.
“In recent years, China has upheld the principles of extensive consultation, joint contribution and shared benefits, continuously strengthened trade and investment cooperation with South Africa. We have achieved genuine mutual benefits and win-win results,” he said.
BAIC South Africa chief executive Yang Yixin said the B30 had been built to meet the diverse demands of South African roads and was available in both fuel and hybrid options.