South Africa in talks with Chinese automakers to boost local production

By Sfundo Parakozov

JOHANNESBURG (Reuters) -South Africa is in talks with Chinese automakers to encourage them to invest in local production, with one manufacturer showing strong interest in building cars locally, a senior government official said on Wednesday.

Africa's most developed car manufacturing hub is at an inflection point, with a drop in domestic output and a surge in imported vehicles, mostly from China.

Competition is intensifying, meanwhile, with the likes of Toyota and Volkswagen vying for market share against electric vehicle producer BYD as well as Chery, Great Wall Motor and Beijing Automotive Group (BAIC).

Trade, Industry & Competition Deputy Minister Zuko Godlimpi told lawmakers in parliament that discussions are under way with several Chinese automakers to manufacture their cars in South Africa instead of importing them.

"One area of their interest is to invest in hybrid vehicles and electric vehicles because that is the market that they are servicing globally," Godlimpi said.

One Chinese company had talks with the trade and industry department in August and expressed an interest in establishing operations in either East London or Port Elizabeth, he said.

To escape pressure from a damaging price war in their home market, Chinese automakers are expanding into Africa in search of profits. BYD and Chery are among about 15 Chinese car brands active in South Africa, with Geely, Leapmotor and Changan set to join them soon.

South Africa is also reviewing its tariff regime as it seeks to protect the sector from low-cost imports.

"We've also been trying to move up to the highest ceiling of import duties to make sure that cheap imports do not price out South African-manufactured cars," Godlimpi said, adding that such changes take time to implement.

(Reporting by Sfundo ParakozovWriting by Nqobile DludlaEditing by David Goodman)