The Chinese carmaker that wants to build more vehicles in South Africa

Chinese carmaker BAIC plans to expand its manufacturing capabilities in South Africa despite a troubled start.

BAIC, short for Beijing Automotive Industry Corp., is a Chinese state-owned automobile manufacturer.

It formed a partnership with the Industrial Development Corporation (IDC) to establish BAIC South Africa in 2016.

According to the agreement, BAIC holds a 65% stake in the local division, while IDC owns the remaining 35%.

A factory was then opened in 2018, and Chinese President Xi Jinping and South African President Cyril Ramaphosa were in attendance.

Located at the Coega Special Economic Zone in Gqeberha, the project was China’s largest investment outside Europe.

The R11 billion plant had a vehicle assembly line, press shop, paint shop, body shop, administrative offices, and a neighbouring supplier park for component manufacturers to support production.

Despite the growing popularity of Chinese automakers in South Africa, specifically GWM and Chery, the BAIC factory has struggled with production since its launch.

In 2024, City Press reported that the plant had assembled only 300 units in six years. It missed all its targets. For context, the Ford Silverton plant in Pretoria produces over 700 bakkies daily.

BAIC aimed to produce between 40,000 and 50,000 vehicles annually for both local and export markets, which would have created approximately 3,000 jobs by the end of 2022.

The company attributed the poor performance to labour disputes, the Covid-19 pandemic, and supplier troubles.

The company also noted that the South African market is too small to support the whole operation of the plant, with the company needing to grow its brand and market share.

BAIC South Africa also did not benefit from the government’s incentives of the Automotive Production and Development Programme (APDP), which allows rebates and subsidies.

Production at the factory started with the D20 and then the X25, but both models were discontinued.

The X55 was then introduced and proved popular with the local market, scooping car of the year awards.

Positive signs

Recent government meetings have indicated an increase in investment from BAIC to expand the plant’s services.

Chinese ambassador to South Africa Wu Peng visited BAIC’s headquarters in Beijing in April, where its chairman told him that BAIC plans to expand its plant in South Africa.

Peng said that the expansion would come despite the impact of unreasonable US tariffs.

These comments came amidst heightened tensions over the country’s extremely high tariffs. However, tariffs have since been lowered following negotiations between the countries.

South African Minister in the Presidency Responsible for Planning, Monitoring and Evaluation, Maropene Ramokgopa, visited the BAIC factory last week.

As the District Development Model Champion in Nelson Mandela Bay Metropolitan, Ramokopga led a delegation to meet with BAIC’s leadership,

The meeting focused on deepening collaboration in implementing reforms to accelerate development.

The increased production could further cement BAIC and the presence of Chinese manufacturers in South Africa.

Several brands have seen a sharp drop in sales over the last decade, with many consumers facing increased cost pressures amidst heightened interest rates and slow real wage growth.

Chinese brands are excelling in this department by providing high-quality specifications, advanced technology and competitive pricing, which makes them an attractive alternative to normal luxury brands.

Another indicator of the Chinese car brand’s success in South Africa is its growing presence in vehicle financing deals.

Standard Bank’s vehicle finance division revealed that its share of Chinese brands in new financing deals increased from 6% in 2022 to 7.4%.

BAIC is still behind GWM, Haval, and Chery in terms of the most populated brands financed by Standard Bank.