Toyota's R454m Hiace boost sets out to support the 'wheels of our economy'

09 October 2019 - 16:09
By Bruce Fraser
Minister of trade, industry and competition Ebrahim Patel shakes hands with Andrew Kirby, president and CEO of Toyota SA.
Image: Supplied Minister of trade, industry and competition Ebrahim Patel shakes hands with Andrew Kirby, president and CEO of Toyota SA.

In a much-needed boost for the local motor industry, more specifically KwaZulu-Natal, Toyota SA has announced a cash injection of R454m to enhance production of its Hiace range of vehicles at its Prospecton plant, outside Durban.

In an economy that continues to show strain and with many manufacturers battling strong economic headwinds, the significance of the contribution to the economy’s overall GDP cannot be underestimated.

While a large portion of the investment has gone towards extending and refurbishing the existing workshop and procuring more specialised equipment, such as robotic welding machines, a significant emphasis has also been placed on raising local content in the vehicles from 33% to 44%. 

This will not only lead to additional direct employment, but also have a much-needed spill-over effect to local SMMEs.

“The latest contribution places Toyota South Africa’s total investment in the Hiace plant at over R1bn since our initial investment in 2012,’’ said president and CEO Andrew Kirby at a ceremony last week.

“The minibus taxi industry plays a pivotal role within the South African transport system and, as such, is important in supporting the wheels of our economy.

“This investment is another major vote of confidence in the capability of the South African automotive industry and the KwaZulu-Natal economy. Manufacturing is the largest contributor to economic output in the province, supporting more than 350,000 direct jobs,’’ added Kirby.

The Hiace dominates the sales chart in this demanding segment, with a whopping 96% of market share, an increase of 24% since 2015.

After a government incentive to localise, the Hiace has been wholly built at the plant since 2012. Another positive spin-off to the investment is that there is now less exposure to the follies of forex fluctuation, which will hopefully result in fewer price increases going forward.

Attended by a number of local and international dignitaries, including MEC of economic development, tourism and environmental affairs in KZN Nomusa Dube-Ncube and the Japanese ambassador to SA, Norio Maruyama, minister of trade, industry and competition Ebrahim Patel made the keynote address.

“The African continent is a big story-line and there is a greater demand for taxis than we can supply,’’ he said. “This investment by Toyota falls in line with President Cyril Ramaphosa’s projected investment drive of R1.2tn and will help deepen economic development. The importance of an integrated value chain will ensure growth is sustainable.’’

SA is not the only market in which the company is looking to cement its dominance. It also has its sights on other countries on the continent, announcing that export operations have begun to support the local assembly of seven derivatives of the Hiace in Kenya.

Close to R20m has been spent on establishing a packing plant to support this ‘’knock-down business”. In essence this means the vehicles will be transported to Kenya in containers, where they will then be reassembled, resulting in the Kenyan motorist being afforded the opportunity to buy a vehicle at a more competitive price.

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At a glance:

* About 600,000 people are employed in the taxi industry

* An estimated 15 million people use taxis daily, compared with buses (nine million) and trains (two million)

* Annual turnover is an estimated R90bn

* Ses’fikile means “We have arrived’’ in isiXhosa

* The Hiace has been around since 1977 and is now into its fourth generation

* The plant will produce 15,000 Hiaces this year and an estimated 19,000 next year

* 80 new jobs have been created

* The roof of the new building consists of solar panels, producing R1.3m worth of electricity a year