Chery, Nissan and the future of Rosslyn
Bakkies mean great business for car companies in South Africa, and the Chery-Nissan deal could reshape the local market in many ways. We explore how.
Nissan built bakkies in Rosslyn for more than 60 years. And some of those models were among South Africa’s most iconic cars: the 1400 Champ, Hardbody (its legacy NP300 version) and Navara.
But the inevitable has now happened. Nissan South Africa has been struggling for a long time. With the company making its biggest international restructuring ever last year, Rosslyn was never going to survive. But can it be revived? That’s the question anyone who is interested in the South African car industry, and specifically Chinese vehicles, will be pondering.
The dealsheet is simple. Chery is buying Nissan’s factory and stamping facility in Rosslyn. But buying an established automotive assembly plant is complicated. There’s the question of Nissan’s technical and labour staff; South Africa’s entrenched manufacturing sector trade unions; and the people most affected by this deal that everyone forgets about: all those small- and medium-sized suppliers who have delivered with commitment, building numerous locally sourced components for the Navara over the years.
Why did Chery buy the Nissan Roslyn plant?
The Chinese are masters at building and commissioning assembly facilities. We don’t need to tell you that much of what you buy is made in China. Nobody is better at breaking ground, building and getting a factory scaled up and producing than the Chinese.
But Chinese car companies, like Chery, also know it’s often cheaper to buy an existing factory that’s in trouble than build a new one. You save on timelines and pure construction costs. And that’s part of the motivation Chery had for buying Nissan’s Rosslyn assets. Everyone knows Nissan is in trouble globally, and it’s restructuring. So Chery could call a price and the likelihood was that Nissan would accept it. And means the Rosslyn assets were probably bought for a bargain.
Another reason Chery wanted Rosslyn was government funding. The South African automotive industry receives significant financial support from the government. If you build cars here, you can price them cheaper because they don’t trigger the 25% import tariffs. And you can access a lot of government support money, which makes it even cheaper to build.
Nobody knows how to build as cheaply and well as the Chinese. And South African automobile production costs are actually quite high. But without import tariffs, and with access to the government’s APDP incentives and export credits, Chery South Africa’s product portfolio could become even more affordable in South Africa. This means it could undercut its Chinese rivals, who all need to pay that 25% import duty.
Will Chery unlock export credits & EU access?
Chinese companies are not in the habit of overpaying for foreign assets. Chery and Nissan have not disclosed the numbers involved but you can be sure the math made sense to Chery.
The Chinese automaker bought a fully functional vehicle assembly plant for a likely bargain. And buying it also unlocks the potential of South African government subsidies and export credits to offset the tariffs on imports. Chery’s aggressive growth, with all the sub-brands (Jaecoo, Omoda, Jetour), means that those export credits can make Chery’s products cheaper.
And then there’s the US and EU market issues. International trade regulations have become highly volatile, but a Chery-built vehicle in Rosslyn could be exported to the lucrative US and EU markets under the preferential trade status that South African-built vehicles enjoy into those markets. This could become very relevant in the near future, as Chery wants to unlock wealthier global markets in North America and Europe.
It’s also about Chery countering GWM
Chery will bring advanced manufacturing ideas to Rosslyn. But it’s not going to build a wildly advanced BEV or PHEV monocoque luxury crossover. That would require a huge investment in advanced robotics. Besides, you don’t buy a proven body-on-frame bakkie facility and then decide not to build bakkies…
Nissan Rosslyn was always a core bakkie facility, although it did also build passenger cars. The last Nissans that will be built at Rosslyn are Navaras. And everyone who knows anything about the local vehicle market is aware that bakkies are very profitable.
“But Chery doesn’t have a bakkie!” Not yet, but it’s coming. Chery’s Himla double cab was revealed at last year’s Shanghai Auto Show. Chery’s very smart strategic planners have clearly seen how well GWM has done in South Africa with P-Series. The demand and acceptance of Chinese double cabs are proven. Thanks, GWM.
Chery desperately wants to enter the South African bakkie market. Doing so with a Rosslyn-built Himla, undercutting P-Series on cost, would put Chery in the most powerful position of any Chinese car company doing business in South Africa.
What can Chery do with the Nissan Rosslyn plant?
Bakkies are not complicated to build. They need fewer expensive welding robots and stamping tools than a monocoque-structure vehicle, like a crossover or SUV. And although Nissan had underinvested in Rosslyn as its international financial struggles deepened, the core floor planning and tooling to make Himla-sized body-on-frame bakkies are all in place.
The Rosslyn facility doesn’t have the latest assembly tech but a bakkie-building assembly plant doesn’t need that to construct good vehicles. Or be profitable. Ford’s Louisville assembly plant in Kentucky, USA, doesn’t have a high level of automation or robotics, but it is Ford’s most profitable production facility and one of the world’s most profitable vehicle manufacturing sites. All because it builds Ford F-150s, with few robots and many American line workers.
From engine sizes to overall vehicle structure, there’s not much difference between a Navara and a Himla. Which makes it even more obvious that Chery’s only real vehicle of destiny for production in South Africa will be the Himla bakkie. The only bits of the Himla that will be a lot more sophisticated than the Navara are its infotainment screen and some of the surround-view sensors. But Chery will import those components from its established Chinese supply chain.
SA-spec Chinese bakkies built at Rosslyn?
Chery’s takeover of Nissan Rosslyn is a moment for the South African car industry and the local vehicle market. But it could open the potential for a local derivative Chinese bakkie better suited to harsh, corrugated dirt roads and South African driving needs.
Chinese bakkies offer many features and cabin tech, but their suspension calibration need work. They either ride very harshly on rough dirt roads, or they lack suspension travel when navigating tricky, rocky off-road trails with lots of cross-axle features.
If Chery will build bakkies in Rosslyn to unlock all the government incentives and subsidies, it will have to have about 40% local content. And that’s in value, not by component weight.
What does this really mean? All those screens and sensor tech that Chery will have in a Rosslyn-built Himla will be imported and add significant value. And that means that a lot of the bakkie’s hardware and core mechanical components will be localised.
Decades of supporting Toyota, Ford, Isuzu and Nissan’s South African bakkie builds and localisation needs has created several South African specialist automotive component companies. People who make bakkie South African spec axles and suspension components, mechanical elements that make a huge difference to ride quality. Imagine the potential of Chery’s product people using some of those proven South African components in an SA-spec Himla…
