From Coega to Tanzania
FAW Vehicle Manufacturers South Africa (FAW SA) has seen a steady increase in sales and exports, following the opening of its Eastern Cape truck assembly plant in 2014.
To date, FAW SA has recorded exports of 90 trucks. To be more specific, exports in the first four months of 2015 reached 29 units, increasing to 42 units for the same period this year.
FAW truck sales in South Africa reached 215 units for the first four months of 2015, increasing to 291 units for the same period in 2016 – this in a domestic new-vehicle sales market expected to decline by around 10% this year.
These positive numbers, however, are still some way off from the ambitious targets set by FAW when the Chinese manufacturer opened its Coega plant.
FAW SA executive director Richard Leiter noted in 2015 that it was important for the company to improve its production volumes.
“We need to reach 5 000 units a year in South Africa and sub-Saharan Africa in the not-too-distant future,” he said.
This number included the reality that FAW SA would need to build between 2 000 and 3 000 units a year “within the next two to three years for export to sub-Saharan Africa, excluding South Africa”, he added.
Leiter believed this was possible as FAW sold around 10 000 trucks a year in Africa from China, with FAW SA able to clinch a percentage of these sales.
SA SOURCING ADVANTAGES
Part of the recent uptick in exports from FAW SA is a delivery of ten FAW J5 tippers to Tanzania.
A growing number of Africa truck dealers that traditionally placed their orders with FAW China, are moving their orders to South Africa, notes FAW SA.
There are many advantages to sourcing FAW products from South Africa, the most important being time to market and, for Southern African Development Community and African Union (AU) countries, there are the added cost advantages enabled by import/export duty agreements, explains FAW SA marketing and strategy manager Cheng Zhang.
From a cost point of view, African buyers can save truck import duties of between 25% and 40%, he notes.
Another advantage of importing FAW trucks through South Africa is that customers can get their vehicles within 30 days – much sooner than from China, which requires three months between order placement and delivery, adds Zhang.
He says FAW SA plans to supply trucks to almost all right-hand-drive African countries. However, the plan is to also assemble left-hand-drive vehicles, so that other AU countries may also reap duty benefits.
FAW SA also supplies parts to African dealers importing South African specced models. However, some dealers that import local specification models from FAW still source their parts directly from China, as the purchase process is familiar and uptime not affected.
Zhang says FAW SA continuously evaluates its production options for the Coega plant.
“However, we remain circumspect on drastically changing our local production complexity by adding too many different models, It remains in our interest to keep our production plant simple, and to continue to maintain the highest levels of quality, rather than chase huge production diversity without adequate up-skilling and possibly a loss of focus on our core value – quality at a fair price.”