Coega in talks with vehicle manufacturers

Three motor manufacturers are in discussions with the Coega Development Corporation about the possibility of establishing completely knocked-down (CKD) manufacturing facilities in the industrial development zone (IDZ).

Gustav Meyer, the senior manager of international markets for the transport industry at the corporation, confirmed this and identified the companies as one Chinese and two European motor manufacturers.

One of the European motor manufacturers was a heavy truck manufacturer, he said.

Meyer declined to identify the motor manufacturers with whom discussions were taking place. But the Chinese motor manufacturer is believed to be Beijing Automotive International Corporation (BAIC), which last year confirmed that it would be investing R11 billion in a new vehicle manufacturing plant in South Africa.

Possible investment
The Industrial Development Corporation previously confirmed the corporation would have a shareholding of between 20 percent and 35 percent in the venture, with the balance held by BAIC, China’s fifth-largest automotive manufacturer.

Meyer said there were different timelines for a decision on the possible investment by the three motor manufacturers, with the first around mid-year and the others a bit further away.


He confirmed some of the changes last year to the Automotive Development and Production Programme (APDP) had stimulated increased interest in the Coega IDZ. This included the reduction from this year in the annual volume threshold for vehicle production from 50 000 units to 10 000 units to qualify for APDP incentives to allow new entrants into the local industry.

Meyer said there had been some interest by motor manufacturers in establishing semi knocked-down (SKD) plants in the IDZ prior to this change, but CKD plants were getting preference now, particularly following the depreciation of the exchange rate of the rand.

“Coega remains confident that some of the OEMS (original equipment manufacturers) currently exploring South African shores will expand operations and choose the Coega IDZ as a location to serve Africa and other export markets,” he said.

Meyer said the automotive industry was one of the growing industries dominating in manufacturing nationally and globally. It was the largest manufacturing sector in the South African economy, contributing about 7.2 percent to gross domestic product in 2014.

Meyer said President Jacob Zuma mentioned in his State of the Nation address this year that government incentives for the automotive sector had attracted investments of more than R25 billion over the last five years.

He said Zuma’s comments were indicative of South Africa’s position as a developed and established automotive sector base that had shown resilience and potential to compete globally.

Meyer said the Coega IDZ was the biggest one in the country and the gateway to global markets with two ports serving the logistic needs of investors.

He said the automotive sector was already one of the key sectors situated in the Coega IDZ, while about 35 percent of the domestic automotive components industry was located in the Nelson Mandela Bay area.

The catalysts were the presence of General Motors, Volkswagen, the Ford engine plant and First Automotive Works in the area, he said.

Meyer added that many suppliers in Nelson Mandela Bay were also key players in the component supply chain of Mercedes Benz South Africa in East London.