Toyota South Africa plans to invest in new equipment, upgrading facilities and carbon neutral activities and will soon make an announcement on manufacturing components locally, which is likely to create jobs.
“We are making significant investments even in this soft economic environment because we have a long-term view that if we don’t invest, it’s going to be very difficult for us in the future,” said Toyota South Africa president and CEO Andrew Kirby. He did not reveal how much the company would spend.
Manufacturing operations would need to change significantly, not only to achieve carbon neutral targets but because the technology and processes used would be different.
Despite weak trading in 2023, Kirby said no jobs were lost and this year Toyota will implement programmes that are likely to result in new jobs.
“The biggest opportunity for job creation is in localising manufacturing components and we’ll make some announcements later in the year related to investments.”
Speaking at Toyota's annual state of the motor industry event, Kirby said the car industry expects volumes for this year to marginally increase 1.5% as excess stock is cleared out after soft trading last year.
New car sales declined in 2023 on the back of low consumer confidence and spending due to rising inflation, increased fuel prices and currency volatility. This led to car manufacturers and dealerships providing discounts and incentives to drive sales. Consumers are expected to remain under pressure as interest rates remain elevated.
Kirby said the first quarter of 2023 started off positively and the industry was on track to achieve the 570,000 vehicle sales prediction made by Toyota last year. However, sales started to stagnate, especially after the second half of the year, ending at 532,098 — just 0.5% up on 2022.
We’d really like to see an accelerated implementation of programmes that can help produce electric vehicles in South Africa
— Toyota CEO Andrew Kirby
“We expect a soft market for the first half as the build-up to national elections will create uncertainty, business and customers will hold up a bit. Expectation is that the market will normalise in the second half as stock is cleared out. So the second half will be slightly stronger,” he said.
Toyota bucked the negative retail trend by ending 2023 on 142,612 units, which was not only the highest volume sold since 2007, it equalled the company’s best market share on record.
Leon Theron, head of sales at Toyota South Africa, said it was a tough year for the industry. During the first quarter the sales team was confident but the “market turned on us in the second quarter. To achieve 142,000 units is remarkable in a market that really slowed down.”
Sales of electric vehicles gained momentum with a 65% volume increase last year to 7,693, the largest contribution coming from hybrid cars. Toyota’s overall share of the electric vehicle market is 53%.
Kirby said though “the adoption of new energy vehicles is still slow, as a business and country we don’t want to be left behind — we also want to transition to the technologies available in the rest of the world. We’d really like to see an accelerated implementation of programmes that can help produce electric vehicles in South Africa, and accelerate mass adoption of a whole range of these vehicles.”
The government published a white paper on electric vehicles two months ago, outlining some guidelines for local manufacturing.
Kirby said clarity is still needed. Toyota has delayed some investment decisions and wants to finalise its plans soon “as we have three to four years lead times for when [we] make the investment to when we start manufacturing”.
“If it takes another three years to be finalised, we might lose out on opportunities. We are competing with other countries. Thailand, Mexico, India and Taiwan all want to produce electric vehicles and sell to South Africa. Once they have those investments we will lose our opportunity.”
Major export markets in Europe have announced plans to phase out internal combustion engines by 2030, and this will hit the local car manufacturing industry.
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