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Toyota aims to increase exports into Africa as market recovers

Andrew Kirby

Andrew Kirby

17th August 2018

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Toyota South Africa Motors (TSAM) aims to export 100 000 vehicles a year from its Durban plant, says president and CEO Andrew Kirby.

Total plant capacity is 242 000 units a year, which includes a 234 000-unit capacity for the Hilux, Fortuner and Corolla, 13 500 for the Ses’fikile minibus and 5 000 for Hino trucks.

Production should reach about 135 000 units this year, says Kirby, up from 130 000 units last year.

“We had some constraints in terms of engine and gearbox imports from Thailand and Japan that held back production volumes in 2018. This should be resolved towards the end of the year and going into 2019,” says Kirby.

TSAM exports should reach 50 000 units this year, he adds, up from the 43 000 vehicles exported in 2017.

“This is some improvement, but far below what we used to do. In the past we exported close to 60 000 units a year to Africa alone.”

Hilux exports to Africa will reach about 16 000 units this year, with exports to Europe to total 32 000 units.

The Fortuner and Corolla are destined only for the local and the rest-of-Africa markets.

Total export to the rest of Africa from the Durban plant will reach about 17 500 units this year, up from last year’s 15 000 units.

Hino trucks and Ses’fikile minibuses are not exported.

A declining African market has been a drag on TSAM’s production for some years, following the substantial weakening of the continent’s economic outlook on the back of declining oil and commodity prices.

Kirby, however, expects to see some upturn in a number of African economies in 2019.

“The region has lots of potential, but it will take five to ten years to see that potential. We expect to see the market move upwards again in the next two to three years.”

Kirby bases his optimism on the fact that Africa has seen some “good investment” in infrastructure in recent years, as well as an improvement in commodity prices.

A number of African economies are also developing industrial policies, which are attracting foreign direct investment.

Also, gross domestic product per capita growth has been pushing towards the tipping point for motorisation – that point, at around $3 000, where earning power is sufficient to consider buying a vehicle.

“We expect to see heightened levels of motorisation in Africa going forward,” says Kirby.

He notes that TSAM will attempt to secure its share of the cake of the rest of Africa market through strengthening its support, service and sales activities on the continent. New product lead times will also be shortened.

“Essentially, we’ll prepare for the expected market growth. It is difficult, however, to justify investment to your head office when economic conditions are uncertain.”

TSAM will review its export line-up from South Africa to the rest of Africa, adds Kirby. He does not, however, want to divulge any detail on what this change may look like.

Kirby indicated last year that TSAM was investigating the possibility of producing a small, affordable car at the Durban plant.

“We have been investigating bringing an additional product to the South African plant, but no decision has been made yet,” he says.

Kirby says TSAM is considering establishing a presence in a number of African countries.

“We cannot yet say where this will be, but yes, these plants will be supported from South Africa.”

TRADE WARS
Kirby says he is not especially perturbed about the trade war between the US and China, as it would not necessarily directly impact on TSAM’s business.

Brexit, however, could be problematic, as the UK is South Africa’s biggest single new-vehicle export market.

“It seems, however, as if the Department of Trade and Industry and the Brexit team have made some good progress on securing South Africa’s position,” says Kirby.

SA MARKET
Kirby expects the South African new-vehicle market to reach 560 000 units this year, up only slightly from the 557 702 units sold last year.

Toyota sales have been surging ahead of current market growth, however, with dealer volumes at South Africa’s most popular brand up 7.3% for the first seven months of the year, with market share up from the 22.7% recorded for the same period last year, to 24.5%.

“In tough markets people move towards stable, reliable brands with high resale values. We have also improved our service levels and product competitiveness, drawing new customers,” says Kirby.

 

 

Edited by Creamer Media Reporter

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