President Jacob Zuma on Tuesday officially opened Toyota South Africa Motors’ (TSAM’s) new Fortuner and Hilux production lines.

The Japanese manufacturer invested R6.1-billion to facilitate production of the two new models at its Prospecton plant, in Durban.

TSAM manufactured five models at its plant, namely the Hilux bakkie, Fortuner sports-utility vehicle, Corolla sedan, Corolla Quest sedan and Quantum minibus. The company also produced Hino and Dyna model trucks from semi-knockdown kits.

“Preparation for this project has been intense over the last four years,” said TSAM president and CEO Andrew Kirby, speaking at the event.

Assembly of the new Hilux and Fortuner, which shared a platform, would reach 550 vehicles a day, once full production was reached next month.

Durban would be the second-largest Hilux and Fortuner plant in the global Toyota group, after the Thailand site.

INCREASED LOCAL CONTENT
TSAM’s announcement represented the biggest single investment made in the plant to date.

Of the R6.1-billion, R1.9-billion related to supplier tooling; R1.4-billion to in-house tooling; and the balance to in-house facilities and buildings to cater for new press machines. 

TSAM’s in-house component plants also had to undergo some major revamps, with the ladder frame or chassis plant producing a newly designed chassis, which was regarded as a unique selling point of the new models.

New facilities were also installed for the manufacture of a variety of other in-house components, including a new instrument panel, exhaust assembly, brake and clutch assembly, rear bumper reinforcement, catalytic converter, rear and front axle assemblies, as well as the painted resin front bumpers.

While the previous Hilux and Fortuner models had around 1 500 local parts, this number has grown to 2 700 parts for the new models.

“Our future depends on localisation,” noted TSAM manufacturing support group senior VP Nigel Ward.

Toyota’s component suppliers invested R1.7-billion to produce the new models.

The project also attracted five new international suppliers, while creating around 2 000 new jobs in the supply chain. This added to the 557 new jobs that were created on the TSAM assembly line.

BEST-SELLING VEHICLE
The Hilux was South Africa’s best-selling one-ton bakkie, a distinction it had enjoyed 43 times in 47 years.

Local sales now exceeded one-million vehicles.

Sales volumes for the new Hilux were estimated to be in the region of 3 400 units a month, with Fortuner sales forecast to reach around 1 100 retail units a month.

Exports were forecast to be slightly more than 50% of TSAM’s total 2016 Hilux and Fortuner production.

This year, TSAM would export more than 55 000 Hilux and Fortuner units to 74 countries, including Africa (43 markets), Europe (28 markets) and Latin America (three markets).

Exports included right-hand-drive and left-hand-drive variants.

The new Hilux would also continue to be supplied to 16 United Nations-affiliated programmes, funds and agencies.

In addition to producing and supplying fully built-up light commercial and passenger vehicles to global markets, TSAM would also be exporting new components to Thailand for the use in that facility’s Hilux / Fortuner / Innova production facilities.

RAMPING UP
TSAM would see production at its Durban plant drop from 138 000 units in 2015 to an expected 122 000 units this year.

Of the 138 000 units assembled at the Prospecton plant last year, 93 500 units were Hilux bakkies, 10 200 units Fortuner sports-utility vehicles, 26 000 units Corolla sedans and 8 600 units Quantum minibuses.

Despite having a new Hilux and Fortuner in the model line-up, production volumes were expected to decline this year as the production ramp-up of both these models would only be completed in the middle of the year.

With the Hilux TSAM’s major export product, exports from the Durban plant were also expected to take a knock this year. Export volumes should reach around 52 000 units, down from around 60 000 units in 2015.

Kirby was positive, however, that production and export volumes would meet or exceed 2015 levels by 2017.

Hilux exports to Europe and Africa had already started.

STRIKE FEARS
TSAM chairperson and Toyota Motors Europe chief managing officer Dr Johan van Zyl on Tuesday warned of the importance of stable production conditions within the South African automotive industry. This warning came ahead of the start of negotiations to facilitate new multiyear wage agreements within the local industry. The last round of negotiations resulted in expansive strikes that saw the industry lose 34 production days.

“Although we are justifiably proud of the achievements of the motor industry in growing production and especially exports post-1994, we must remember that South Africa currently produces less than 1% of the 90-million vehicles made worldwide each year,” he said.

“We have to remain globally competitive not only in terms of wages and productivity, but also regarding labour stability. I cannot stress enough the importance of engagement – engage, engage and engage again – the need to employ dispute resolution as the first and ultimately only line of defense, rather than resorting to strike action as the solution.

“Nevertheless, I am confident that a fair and equitable labour agreement can be reached and rest assured, no matter what, Toyota will do its utmost to continue to put its customers and South Africa first.”