The popular Isuzu D-MAX range of bakkies is manufactured at their plant in Gqeberha.
Image: Supplied
Isuzu Motors South Africa is on the up and up, but President Billy Tom strongly believes there is room for improvement, especially on the African continent.
Tom was speaking in an interview with IOL and Independent Media at the recent launch of the company’s Isuzu MU-X
“It’s going very well, but we’re not immune to the challenges of South Africa. We went through Covid, fortunately, we were not as harshly impacted as some of the other manufacturers because the product we had played a big role. We were beneficiaries of the growth of e-commerce over the period," he said.
Opportunities
“We export only into Africa, and it has been good to us and being new, just over five years as Isuzu SA, we still maintain good relationships with Japan, so yes, we’re in a good space and excited about what lies ahead."
Tom says there are future opportunities on the horizon for the company.
“I’m working on convincing Japan that we are the anchor for Africa. With the African Free Trade Agreement, there’s a huge opportunity for us,” he said enthusiastically.
“The commercial space (Isuzu also manufactures chassis cabs for medium, heavy and extra-heavy commercial vehicles at their plant in Gqeberha) is also doing well.
“We’re seeing some of the bigger municipalities replacing their fleet, so we’re happy but not complacent.
Isuzu's updated MU-X was recently launched locally.
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New frontier
Africa, though, is the new frontier.
“The next opportunity is on the continent, and our contribution to the business outside of South Africa is not where I wanted to be. We've put the necessary focus and we've seen some good returns, but last year was not the best year.”
Tom says that elections around the globe also had an impact.
If you look at the elections around the continent, around the world half the population went through elections. Whenever you have elections, there are some post election anxieties.
“If you look at South Africa, we voted in May, and I think the government of National Unity was only in August because the guys spent July negotiating.
“Take Mozambique, we spent probably six or seven weeks unable to take vehicles to Mozambique because the borders were closed after the elections and we didn't want to take the risk.
“But in places like Zimbabwe, things went a lot smoother, but other countries were also slightly slower because of some of the decision makers, but this year we foresee improvement.”
Local manufacturers like Nissan and Volkswagen are also looking towards Africa for growth and increased market share, and Tom firmly believes there is an opportunity.
“I think the potential for growth in Africa is there. Cars in Africa are being bought, but they've been dumped in other areas. Also, Africans are not trading with each other. They like going overseas. And to me, some of the challenges are the infrastructure for intra-African trade."
Isuzu builds a full range of single cabs, extended cabs and double cab bakkies locally.
Image: Supplied
Infrastructure
“Take a country like Angola, which is not far from South Africa, but you struggle to find a cruise liner to Angola. You've got to go to Europe to come back to Angola. We need to set up infrastructure to trade within Africa.
“Why can't we have a general cargo ship that will connect the ships in South Africa and from country to country? To me, that's where the benefit lies.
"I think for Africa to kick-start their business, we need something that's custom-made to help the continent trade, but also change the mindsets within Africa. If we are to generate wealth, our currencies need to circulate on the continent before they go out.
Exports
“If you look at the number of vehicles we export, I think probably 80% or more go to Europe and other countries. But only about 15% is in Africa. The French are playing big, so are the Chinese, so to me, that's where the opportunity lies.”
To drive that, Tom says South Africa needs to look at where there are automotive hubs and signed bilaterals.
“In 2011 to 2013, I think we exported something like 22 000 LCVs to Algeria. A few years later, we expect exports to be zero. Why can our government not sign a bilateral agreement with Algeria?
“The Algerian government changed some of the rules that didn’t make it attractive for us to go. Now, the Algerian government is very keen to restart the automotive industry. Why is South Africa not raising its hand? Egypt is another opportunity. Why are we not signing a bilateral agreement with Egypt?”
The Isuzu boss says that we also don’t export to countries that import their vehicles to South Africa.
“How many cars do we export to India? One of the biggest importers is India, but we're not sending cars to India. How many vehicles from South Africa are going to China? None.
"Why do we allow someone in the continent when we've got a first-hand opportunity to do business with the continent? That's why I'm saying we need to look at the pockets and start working with countries in those pockets, like Algeria and Egypt.
Isuzu is involved in a number of local CSI projects including Rally to Read.
Image: Supplied
Chinese threat
Regarding the influx of Chinese vehicles, Tom says he isn’t asking for protectionist policies or other barriers to entry but rather what the African continent needs.
“Why do the Chinese not set up shop in South Africa? I'll use India as an example. I think India is number four in the world for vehicle manufacturing, from nowhere to four. What has India done? They've positioned themselves as an automotive assembler, not necessarily Indian owned.
"If South Africa can work with the Chinese, there's enough capacity in this country where they can do contract manufacturing, where they can set up shop not only for the people in South Africa, but for the continent.
“The automotive sector needs a lot of skills, which we have. Why can we not convince them to set up shop instead of producing the cars? The African free trade argument will probably then benefit South Africa even more.
"We currently are .65% of the global production. Maybe then we can get to over 1%, two percent and even 3% as the continent grows,” Tom said.
“Let's find a way of approaching government to also be part of the solution for some of these challenges. Let’s negotiate and look at how we can use ourselves as a base for the rest of the continent. And with the potential challenges that we might be facing from the likes of America, you need to look at other solutions.
“By doing that, especially if you move into the lower segment, you might be able to provide the continent with cars that people can afford as well. In the last 15 years or so, the premium segment has collapsed completely. People are buying down so it's a huge opportunity.”
Government procurement
Tom also took a swipe at the government for buying fully imported vehicles.
“We've now even seen state-owned entities buying vehicles that are fully imported. We have local bakkie manufacturers. Why buy an import? I think it's important to revisit government procurement.
“There are premium vehicles that are produced locally. Why must they buy imports? I think that charity begins at home. The government should put rules in place to say that we want to support the automotive industry.
"If you look at the risk of the exports to America, we're going to end up with vehicles that we cannot sell because of the tariffs. But you've got a market at home that is buying vehicles that are fully imported instead of supporting local.
There are talks with the government, and Tom says it’s important to bring the unions into the mix.
“When we go to the government, it’s also about protecting jobs. We all want to protect jobs, and when we’re together with the unions, we can work better with the government to find a solution,” Tom concluded.