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Korean auto firms aiming to assemble bakkies at Benoni plant

16th September 2016

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Kia Motors South Africa (KMSA) is close to finalising a deal with Hyundai Motors South Africa (HMSA) to assemble its K2700 and K2500 workhorse bakkies at HMSA’s Benoni plant, says KMSA CEO Ray Levin.

HMSA assembles the Hyundai HD65 and HD72 medium-duty trucks at the Benoni facility, as well as its H100 workhorse pick-up.

Hyundai is a major shareholder in the Kia group. In South Africa, KMSA and HMSA are both Imperial group companies.

Levin says the assembly deal with HMSA should be finalised within the next six weeks, with the project up and running early in the next year.

Apart from gaining duty benefits from local assembly, KMSA also saw an opportunity to increase its employment footprint in South Africa, he notes.

KMSA is targeting an initial assembly volume of around 100 units a month.

The company, however, also has plans for the more traditional bakkie market in South Africa, populated by brands such as the Ranger and the Hilux.

Levin says Kia should have a one-ton bakkie on offer by 2019 or 2020.

The brand should also have a sports car available in “the next two to three years”.

Tough Year
KMSA is experiencing a tough year, much like every other vehicle manufacturer in South Africa.

With a fragile economy treading water, Kia will probably see new-vehicle sales drop to around 18 000 units in 2016.

Sales reached around 28 000 units in 2011.

The dramatic weakening of the rand has taken its toll on importers, says Levin.

“Kia will maintain its 3.3% market share in the new car and light commercial vehicle markets this year, and we are reasonably happy with that.”

Levin expects total new-vehicle sales in South Africa to drop by up to 15% this year.

Next year may prove more positive for KMSA, however, as several new models are set to launch in the South African market.

The new Kia Sportage sports utility vehicle will make its debut in October, followed by the new Rio hatchback in February, and the fresh Picanto small car not too long after that.

“We’ll renew our three top-selling models in the next eight months, which should lead to an increase in volumes,” says Levin.

A strong product onslaught notwithstanding, the South African market looks set for another tough two years, he adds.

“South Africa is a hugely volatile place at the moment.”

Levin says the situation is not likely to get better unless business confidence recovers, government’s efforts to stimulate the economy gather speed, the rand gains strength and the South African consumer’s debt position improves.

“Add to this the threat of South Africa reaching junk status by the end of the year and all the economies worldwide that are under pressure: the US, Europe, China, Brazil and Russia.”

Current movements in the local market include a “huge trend” to buy down, says Levin, with customers trading in their C-segment vehicles for smaller, less expensive B-segment vehicles, and their B-segment cars for A-segment cars –which should favour Rio and Picanto sales.

Levin to Leave
Following almost 19 years at KMSA’s helm, Levin will, in 2017, depart from the company he founded and take up a position at Imperial’s motor division.

Gary Scott, who has a long history with KMSA, will take over from one of the longest-serving automotive company CEOs in South Africa.

Levin says one of the biggest reasons for KMSA’s success has been the fact that he has always surrounded himself with “the right people”.

“The biggest thing about any leader is the ability to inspire and direct people. I am grateful for the people I have worked with at Kia. This company has been an incredible dream come true.”

The biggest change he has witnessed in almost two decades in the South African motor industry?

“The business has become very technical. It’s not about buying and selling cars as it used to be. When I started this company, it was before the active age of the Internet. The Internet has opened up a whole new world of opportunities.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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