In these times of darkness and economic gloom, it is exceedingly refreshing to spend time with someone genuinely positive about fixing the ailing nation and backing that up by signing off on more than R4-billion in investment in the next two years.
Andrew Kirby, President and CEO of Toyota South Africa Motors (TSAM), concedes total vehicle sales for the year 2020 will continue the downward trajectory that began in 2013 and settle at 515 000 at the end of the year.
Of the total forecast, Kirby estimates 339 900 will be passenger, 150 585 will be light commercial vehicles while the remaining 7 880 and 16 635 will be made up of medium and heavy commercial vehicles.
Despite that, the company is investing heavily in its Prospecton, Durban with R2,43-billion going towards the manufacture of an all-new passenger model that will replace Corolla production (except for the Quest) for both local an international distribution.
“Things are bad,” he admits, referring to the catastrophic failures of both State Owned Enterprises (Eskom, SAA etc) and local municipalities, adding: “Maybe it is something we as a country needed. Perhaps getting to absolute rock bottom is the incentive to rise up and fix or repair those failures.
“I am confident South Africa can do it and we, as Toyota, are backing that.”
As Ettienne le Roux, Chief Economist at Rand Merchant Bank (RMB), puts it: “Over the past two or three years, consumer confidence has been low and spending has quite been conservative. This will, of course, affect local vehicle sales because buying a car is considered to be discretionary spending. Finances are really tight and the pressure consumers are feeling is quite significant…”
Dr Thabi Leoka, an independent economist who also sits on President Cyril Ramaphosa’s Economic Advisory Panel, says the current South African socio-political landscape is also not conducive to attracting investment.
Referring to South Africa’s socio-political problems, she says: “The house internally is dirty, and you are going out to the world to invite investors to come and eat in this house of chaos… We need to focus on cleaning this house first.”
Despite the negative economic sentiment expected to impact consumer spending in 2020, TSAM remains cautiously optimistic about achieving a competitive market share at the end of the year. According to Leon Theron, Senior Vice President of Sales and Marketing at TSAM, the company strategy involves galvanising Toyota’s wide dealer channel, enhancing the Lexus and Toyota hybrid offering as well as a robust marketing approach around the Corolla nameplate.
Adds Kirby: “With our investment, Toyota South Africa Motors is solidifying its long-term commitment to local manufacturing as well as the South African automotive industry. The investment will generate an additional R2,85 billion towards the South African economy a year and approximately 1 500 new jobs. It is of particular importance to note this investment would not have been possible without industrial policy certainty in the form of APDP-2, and I would like to thank all the role-players involved in paving the way to practical implementation of the new policy regime in 2021.”
Other pockets of investment include substantial enhancements to the local production of Hiace Ses’fikile (R450-million) as well as its production volume increase (R91-million) from 14 000 to 18 000 units a year (culminating in 270 new jobs) and the establishment of a packing plant to support TSAM’s knock down business of Hilux in Kenya (R20-million).
TSAM is also investing R365-million to double the size of its Atlas Warehouse from 40 000m² to 80 000m². When completed in 2021, the facility will be the largest automotive parts warehouse in the Southern Hemisphere.
The organisation also has a number of ongoing projects between 2019 and 2020, including an investment into the new Corolla Quest and several facilities upgrades at the plant, that come to a total of R928m.
For Toyota, it will be a busy year on the product front with the introduction of the all-new (imported) Corolla coming in March, the Lexus UX250 this month along with the Lexus LC500 Convertible, the CH-R facelift in April, the Fortuner Epic derivative and the fitment of Android Auto and Apple Car Play to all Toyotamodels across the board.