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Production of new Isuzu pickup starts in PE, exports to follow in Q3

6th March 2013

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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Production of the new generation Isuzu KB pick-up had started at General Motors South Africa’s (GMSA’s) Port Elizabeth plant, with assembly for the sub-Saharan export market kicking off in July or August this year, said General Motors (GM) Africa and GMSA MD Mario Spangenberg on Wednesday.

Speaking in Johannesburg, he said the new Isuzu would be exported to 46 countries in sub-Saharan Africa, with GM exploring export opportunities in the North African market as well.

Exports of left-hand- and right-hand-drive Isuzu KBs were set to follow the failure of a proposed Spark hatchback export programme for the local arm of the US car manufacturer, owing to what Spangenberg termed “cost issues”.

He said that while the Spark could be produced at a fairly similar price tag in South Africa than in South Korea, for example, the additional logistical costs of bringing the locally made Spark to markets such as Australia proved prohibitive.

GMSA was still hunting for viable export markets for the Spark.

GMSA planning VP Ian Nicholls added that GMSA would produce 7 000 Sparks this year, with the manufacturer betting on the latent potential of the entry-level car in the local market to grow its numbers.

Initial Spark production volumes were expected to be 15 000 units a year, of which 50% would have been exported to New Zealand, Australia and other right-hand-drive markets in the Asia-Pacific region.

“Our export history in South Africa has been miserable,” admitted Spangenberg.

GMSA exported a thousand vehicles into Africa last year. The local plant produced around 45 000 vehicles at its Port Elizabeth site.

Spangenberg was hopeful that the Isuzu export programme would prove more of a success than the Spark programme, as the vehicle made in South Africa was specially adapted for the African market.

“We cannot live on 1 000 export units.”

Nicholls noted that the South African-made KB differed from the bakkies made in Thailand and Japan, especially in terms of ride-handling and suspension.

Indicative of the adaptations made for Africa was that local content on the vehicle, engine included, was around 40%. It was 20% on the Spark.

Isuzu production also had much potential for expansion, said Nicholls, as it would be the first time that GMSA would add left-hand-drive markets to its production repertoire.

There were only fourteen right-hand-drive markets in Africa.

Nicholls regarded Toyota’s Hilux as the Isuzu’s main competitor in the African market.

Energy, Labour Challenges

Spangenberg said on Wednesday that GMSA would “not hit” the 50 000-unit-a-year production target set under government’s Automotive Production and Development Programme (APDP), but noted that the manufacturer would still qualify for incentives under the programme as the APDP allowed for ramp-up and ramp-down phases, such as currently seen with the Isuzu project.

He added that there were a number of “red flags” facing South African vehicle manufacturers at the moment, especially as competing auto-building destinations were working to keep the country from becoming a major export hub in favour of their own assembly ambitions.

He said South Africa needed a much more stable labour environment, while the country had also moved from a cheap energy producer, to one of the world’s most expensive energy suppliers.

South Africa also needed to work hard to offset its geographic dislocation in terms of the rest of the world, while a sharper focus on education was required.

Spangenberg added, however, that GM was positive on the outlook for the African market as a whole, as it was the last frontier remaining in the world, with South Africa the most suitable base from which to serve this market.

GM sold 180 000 new vehicles in all of Africa last year, up 17.5% from 2011 numbers.

The total market for new vehicles on the continent was currently around 1.5-million vehicles, with the potential for this to grow to 2-million by 2017, and 3-million vehicles by 2022, believed Spangenberg.

Nicholls noted that any serious competitor in Africa needed to have a one-ton pickup in its arsenal, as well as a B- or C-segment sedan.

He believed that the KB would do well in the high-potential markets of Nigeria, Ghana, Angola, Kenya and Zimbabwe.

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Edited by Creamer Media Reporter

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