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Minibus taxis to be made in SA

The BAW South Africa plant has been set up with a R196m cash injection from its local and South African partners. It will assemble minibus taxis.

Economic Development Minister Ebrahim Patel opens a new minibus assembly plant in the East RandEconomic Development Minister Ebrahim Patel opens a new minibus assembly plant in the East RandThe opening of a new minibus assembly plant is expected to boost the development of the local taxi industry and at the same time create employment opportunities in the Ekurhuleni town of Springs, on Gauteng's East Rand.

BAW South Africa is the result of partnership formed by the Industrial Development Corporation, Beijing Automobile Industry Holding Company (BAIC), and China Africa Motors (CAM), the previous importer and distributor of BAW taxi vehicles into South Africa. About R196-million was injected into BAW South Africa, which will employ 469 people with more than 1 000 new jobs to be created by suppliers and dealers.

BAIC, the fifth largest automotive manufacturer in China, holds 51 percent in BAW SA, with the IDC and CAM sharing the balance. The IDC contributed equity of R22,9-million and will also provide BAW SA with up to R98.6-million in debt facilities.

The new plant will assemble taxis on a semi-knocked down basis, but with a final line identical to that of the completely knocked down (CKD) manufacturing plant. Speaking at the opening of the plant on Tuesday, 13 November in Ekurhuleni, Economic Development Minister Ebrahim Patel said the assembly plant was a step towards full localisation and manufacture of taxis in South Africa.

"It is envisaged that this project will not only supply the South African market. It will also create export opportunities to the rest of Africa." He pointed out that the plant would contribute to a more balanced trade profile in which more value added goods were made in South Africa. "It is an opportunity to avoid the colonial model of trade, where we send our raw materials to China only to import finished goods, which is neither sustainable nor beneficial to our relationship."

About 22 000 vehicles a year are sold in South Africa's taxi market; this is expected to grow to 28 000 vehicles by 2015. It also estimated that a further 100 000 vehicles are sold in the rest of Southern Africa.

Patel said BAW had shown interest in moving from semi knocked down production to a completely knocked down production, including the installation of the assembly and welding line. "Should this second phase be implemented, it will mean a considerable increase in the level of localisation in the manufacture of taxis."

Phase 2 of the plant would require a R2-billion investment and could help create 1 500 additional jobs at the plant.

IDC's chief risk officer, Gerrit van Wyk, said the investment underlined the continued strong co-operation between South Africa and the Brics countries. Brics groups the developing nations of Brazil, Russia, India, China and South Africa. "Localisation is essential to be able to compete globally. Competition is stiff in all markets and you want to be able to stand up against the rest," said Van Wyk.

The assembly plant is one of the first projects under the bus, truck and minibus programme initiated in 2010 to facilitate projects supporting the development of the local medium and heavy commercial vehicle industry in South Africa.

John Jessup, the head of sales and marketing at BAW South Africa, said setting up the company was a real milestone for South Africa. "The industry needs to start becoming more regularised. But the compromises will only start going away if we manufacturers can help to take away the problems that are causing the compromises."

Jessup said that in many cases, parts were generally expensive, resulting in unqualified service and maintenance, even on newer models. "Proper routine servicing is often ignored, leading to loss of warranty and more backyard repairs and even on quite new vehicles."

He pointed out that this would not change by continuing to entrench and perpetuate the current way of doing things. "We want to be sure that we bring new thinking and energy to the taxi business that can build on solid experience."

Ma Chuanqi, the BAIC chief financial officer, said BAW would continue to introduce commercial vehicles into South Africa. "BAIC will support BAW's expansion in South Africa by all means, as we have done before."

He added that the group's goal was to achieve annual sales of three million vehicles by 2015, which would rank it among the world's top 10 international automotive groups.

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