BAW SA
BEIJING AUTOMOTIVE WORKS SOUTH AFRICA (BAW SA)
The Road to
Success
PRODUCTION: Emily Ayson
At the end of last year, the wheels of change were in motion for Beijing Automotive Works South Africa (BAW SA). A leading supplier of minibus vehicles to the South African taxi market, the company has always had the drive to push for further success and innovation. Now as 2017 draws to a close, progress on the completion of plans to upgrade, extend and increase operations from the main Springs manufacturing plant is occurring at an accelerated rate, with the automotive experts on track to cross the finish line in early 2018.
//
In 2012, Beijing Automotive Works (BAW) and the Industrial Development Corporation (IDC) joined forces to establish a company that would combine and represent the pinnacle of Chinese and South African automotive expertise: BAW SA. From the start, former-CFO Samson Mojalefa wanted to create something ‘especially designed for African conditions’. As a result, the 16-seater Sasuka minibus was introduced as a shining example of the type of multi-person vehicle that South Africa really wanted and needed. The Sasuka offered customers a prestigious driving experience, with a luxury interior, in-car entertainment system and leading mechanical performance. From the manufacturing base in Springs, 160 Sasukas are produced
each month by more than 200 employees from Semi Knocked Down kits. These minibuses are then mostly supplied to the local market but also in lesser amounts to Mozambique and Namibia. Speed ahead to now and thanks to an injection of R250 million, extensive plans to upgrade and extend BAW SA’s premises, product line and market reach are well under way. Necessary general improvements will be made to the existing facility, along with the construction of a new body assembly plant, paint plant, trim plant and a larger component warehouse. This will increase the size of the existing site by almost 30% from 25,000m² to a vast 37,840m², allowing more space for both production and storage. According to BAW SA Consultant Tony Godycki,
the expansion will lead to the creation of at least 80 permanent jobs in a variety of roles and BAW SA is already heavily utilising local engineering and construction companies. The move will increase production output to around 500 vehicles a month, a number which could potentially increase again in the future if a two-shift mode of production is ever introduced. R80 million is being given directly by the IDC, with CEO Geoffrey Qhena expressing a keen interest in encouraging competition within the local minibus manufacturing industry. Currently, the Durban-built Toyota Quantum is the leading competitor, but it may not be long before other burgeoning businesses are ready for their turn on the race track to begin. To secure a head start, BAW SA will
www.enterprise-africa.net / 3
TM
4 / www.enterprise-africa.net
TM
TM
www.enterprise-africa.net / 5
INDUSTRY FOCUS: AUTOMOTIVE
// THE MORE COMPLEX CKD ASSEMBLY PROCESS WOULD INCREASE LOCAL CONTENT ON THE MINIBUS TO AT LEAST 35% // transition over into building Sasukas from Complete Knock Down (CKD) kits. This will require a higher proportion of automotive components from the domestic industry being used in production. Godycki stated that BAW SA would be adding glass, tyres, radiators and seats to the growing list of locally-supplied parts, which will inject significant capital into the immediate economy. Moreover, he describes the benefits of this: “the more complex CKD assembly process would increase local content on the minibus to at least 35%,
which would see the Sasuka qualify for duty benefits in terms of exports to countries in Southern Africa”. Import duty is also zero-rated on CKDs coming into the country, making the buying and selling of vehicles much more financially efficient for the company. Lower import and export taxes also means that BAW SA will be able to more easily extend trade far beyond the borders of South Africa, tapping into an already profitable and prosperous means of bringing money into the country. The automotive and component business constitutes the largest faction of South Africa’s manufacturing industry. 33% of the country’s industrial production output derives from this area and in 2016 alone, in excess of 344,000 vehicles were exported. This equates to R171.1 billion being brought into the country’s economy or 15.6% of capital from total exports across all sectors for the whole of South Africa. Cultivating such a revenue stream will be highly advantageous for all parties and countries concerned. Godycki stated that “while the initial focus will remain on the South African and southern African market, it will use its status as a manufacturer under the MIDP (Motor Industry Development Programme) medium and heavy commercial vehicle programme to expand BAW’s reach in all countries that have a preferential trade relationship with South Africa”. BAW SA have strong plans to begin exporting automotive parts to China, which could potentially facilitate entry into the lucrative and extensive Chinese marketplace for both themselves and many other South African enterprises. Lian Zhaoshan from the Economic and Commercial Counsellors Office at the Chinese Embassy has noted how bilateral trade between South Africa and China had reached $9.145 billion in the first three months of this financial year, which was an almost 3%
6 / www.enterprise-africa.net
BAW SA
increase on the previous year. He added that as of early 2017, approximately 150 medium to large-sized Chinese businesses had invested in South Africa, including The Industrial and Commercial Bank of China and the Hebei Jidong Development Group. These investments have helped to create an estimated 30,000 jobs, a figure subject to increase as the economy improves and consumer demand grows. Indeed, in the minibus market there is a growing need for a continuous supply of reliable and robust vehicles to withstand the pressures of transporting South Africa’s 16 million daily commuters. BAW SA’s Yao Li Qiang stated that “there was an increasing demand for cost effective diesel options in the local taxi industry, particularly with the constant increase in fuel prices”. As such, Zhang Wei, BAW SA CEO recently announced preliminary plans to develop and build a higher capacity Sasuka when the new premises are up and running. The vehicle will have a 2.8l diesel engine as opposed to its 2.7l
petrol predecessor, with the purpose of increasing fuel economy and ensuring that customers get more miles for their money. The new Sasukas will also be sold with an unprecedented service plan as standard; a warranty guaranteeing exceptional vehicle performance up to 500,000km coupled with a comprehensive insurance policy to cover both the vehicle and passengers. Wei noted that there are already Sasukas currently on the road with this many miles on the clock, so it is evident that he has complete faith that BAW SA will be able to live up to their reputation for excellence. Further into the future, plans are in motion to begin production of a panel van and even environmentally friendly electrical vehicles that could be utilised in the busy urban delivery sector. For BAW SA, it has never been a race to get to the top of their game, although they are certainly gaining positive momentum. The gentle yet impressive cruise into becoming a
leader in the automotive industry is all down to the company providing an exemplary product that customers can easily recognise and rely upon. This quality, coupled with conscientious investment from Chinese and South African partners has allowed BAW SA to shift up a gear in their efforts, undoubtedly putting BAW SA firmly on the road to success.
BEIJING AUTOMOTIVE WORKS SOUTH AFRICA (BAW SA) +27 11 817 8000 www.bawsouthafrica.co.za
www.enterprise-africa.net / 7
AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
Published by CMB Multimedia Chris Bolderstone – General Manager E. chris@cmb-multimedia.com Sackville Place, 44-48 Magdalen Street, Norwich, NR3 1JU T. +44 (0) 20 8123 7859 E. info@cmb-multimedia.com www.cmb-multimedia.com
Issue No.65
www.enterprise-africa.net
ALEXANDER FORBES
CMB Multimedia does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Multimedia Ltd 2017
Journey of a
Lifetime
Exclusive interview with CEO Andrew Darfoor ALSO IN THIS ISSUE:
Buffalo Coal / Nautic Africa / Grindrod / SAOTA
AS FEAT UR ED IN
ENTERPRISE AFRICA
DECEMBER 2017