EAST London’s largest vehicle dealership has been bought by black-owned Izingwe Automotive Investments.

The deal sets up the second black-owned and managed dealership in the city.

It is also the first to offer a full range of passenger and commercial vehicles.

The dealership, Barnes Motors, in the city’s central business district, holds franchises for Audi passenger vehicles as well as Volkswagen passenger and commercial vehicles.

Transport and Safety MEC Thobile Mhlalo welcomed the deal as an “excellent example” that will offer opportunities to fleet management companies and other enterprises committed to black economic empowerment (BEE).

Volkswagen South Africa marketing and sales director Mike Glendinning said the new partnership was indicative of the motor manufacturer’s commitment to supporting BEE.

Izingwe Automotive Investments (IAI), which is 100 percent black-owned, is the latest venture from Sipho Pityana’s Izingwe Investments.

Zeph Makhatini, chief executive of IAI, and chief financial officer Nkulie Pityana will run the business in East London.

Sipho Pityana will chair the business from his Johannesburg base. He launched Izingwe in 2004 with a R165million empowerment deal in electronics company Altron, while he was executive director at Nedcor.

The former director-general of Foreign Affairs has since secured Izingwe shareholdings in other companies including Old Mutual.

But this is the first time Izingwe has taken a majority share in a business. It holds an 80 percent stake, with the remaining 20 percent held by the National Empowerment Fund, a broad-based black-owned company that seeks suitable BEE investments.

The new enterprise is a vote of confidence in the Eastern Cape economy.

Pityana, born in Port Elizabeth, speaks of the province as the “next Michigan” – the heart of the US automotive industry.

“We are situated here in the heart of the country’s automotive industry … there is a great deal of growth potential in the Eastern Cape,” said Pityana.

The owner and manager of East London’s first black-owned car dealership, Clarence Mngadi, of Autohaus Monti, welcomed the “exciting news”.

“It can be lonely here so it is nice to see some more brothers in the industry,” he said.

Makhatini said the business’s biggest challenge will be turning around customer service.

“We want to move from indifference to customers towards a new culture where the customer is king,” he said.

Mngadi said the new owners will have to work hard to maintain their brand.

But Makhatini saw the deal’s timing as “perfect”, providing immediate growth potential.

This week local business leaders commented on the growth in the vehicle industry.

Outgoing Border-Kei Chamber of Business president Johann Evertse said vehicle sales had continued to confound even the industry itself, growing year-on-year for the last 22 months, with retail showing around 6,5 percent to seven percent growth.

The national market for new vehicles showed more than 20 percent growth in each of the last two years, making it one of the best performers worldwide.

Nico Vermeulen, National Association of Automotive Manufacturers director, predicted demand for new vehicles would continue to grow during 2006.