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Jul 20, 2012

SA amends incentive to help restart minibus taxi assembly

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Toyota South Africa Motors (TSAM) has officially restarted minibus taxi assembly in South Africa with a R70-million investment to enable semi-knockdown (SKD) production of a 16-seater Quantum Ses’fikile – one seat more than the previously imported 15-seater minibus.

The investment created 90 direct jobs at Toyota and 210 jobs at suppliers and service providers, and will see the assembly of 40 taxis a day on a single shift operation, or 10 000 to 15 000 units a year.

The investment follows a request by government for TSAM to restart local production of a local minibus taxi, halted in 2007.

Trade and Industry Minister Dr Rob Davies noted at the opening of the assembly line at Toyota’s Durban plant that the investment would receive government support under the Automotive Investment Scheme (AIS), through a new mechanism that allows SKD assembly of minibus taxis to qualify for incentives.

Under normal circumstances, the AIS, which is a chapter of the new Automotive Production and Development Programme, supports only completely knockdown (CKD) assembly.

“We are amending the AIS to provide support levels to this endeavour. It will be completed in the next few weeks,” said Davies.

He noted, however, that SKD assembly would only be supported until March 2015, by which time government expects taxi assemblers to take advantage of the scheme to convert to CKD taxi assembly, which demands more localisation.

Davies said this “flexibility” is allowed in order to “kick-start” minibus manufacturing in South Africa.

He added that a local taxi assembly industry can feed vehicles into a broader African market, especially under a pending free trade agreement, still being negotiated, between 26 countries on the continent. His department is also pushing for preference to be given to locally assembled taxis under the Department of Transport’s taxi recapitalisation programme, which provides financial support to the taxi industry when replacing their vehicles with newer, safer products.

The South African registered minibus taxi industry numbered 280 000 units in 2009, with the yearly purchase of new taxis at 19 000 units in the same year, said Davies.

“Of these, fewer than 100 were made in South Africa. This was a situation we desperately needed to turn around.”

The local minibus industry contributes R30-billion to South Africa’s gross domestic product a year, transporting nine-million people.

Davies said he believed the support pro- gramme for minibus taxi assembly could secure R1-billion in investment in total, creating around 2 000 jobs.

“We would like to see other companies follow suit and bring minibus production to South Africa.”


TSAM assembly division 3 VP Fezile Myoli says the local arm of the Japanese manufacturer will produce two taxi derivatives in Durban, namely the 2.5 ℓ diesel and 2.7 ℓ Ses’fikile petrol models.

“It really makes sense to produce it here because of its popularity.”

It is estimated that there are currently 250 000 Toyota minibus taxis operating on South Africa’s roads.

Myoli says it took 18 months to roll out the assembly line. Local content on the project is low at the start of the project, with only the starter motor, glass and the battery locally sourced.

TSAM president and CEO Dr Johan van Zyl says a second phase in the taxi project may see the assembly line incorporate other product derivatives, such as a panel van. It will also include greater local content.

South African National Taxi Council (Santaco) general secretary Philip Taaibosch notes that it has always been the council’s ambition to again see taxis assembled in South Africa, especially as it contributed to job creation.

“We must compliment Dr Van Zyl and Toyota on the decision they have made to again assemble taxis locally. We are delighted”.

Santaco has 187 000 members, buying around 35 000 new taxis a year, he noted.

Edited by: Martin Zhuwakinyu
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