Isuzu SA CEO Believes a Collaborative Production Facility is Solution to Deindustrialisation

Heavy deindustrialisation seems to be a key topic on the agenda of South Africa’s leading car manufacturers and during the annual Isuzu luncheon with media, Isuzu CEO Billy Tom alluded to an ambitious collaborative production facility that could be the solution to increasing uptake of locally produced vehicles. 

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Earlier this week in Johannesburg, the Isuzu team hosted members of the media for a recap of 2024 and a glimpse into their future plans. Nothing on the LCV and passenger vehicle front was too out of the ordinary from what we already know but Isuzu CEO and President of naamsa Billy Tom presented an idea that could potentially counter the current deindustrialization faced by the auto industry.

Related: Coming to SA in 2025 – Isuzu

To put this all into context, Tom’s presentation demonstrated a local sales overview between 2018 and 2024. Six years ago, 46% of vehicles sold locally were built in South Africa but only last year that number decreased to 40%. The Indians have capitalised in percentage from the 17% in 2018 to 34% in 2024 while the biggest losers have been Germany who now only have a 4% market share as opposed to 8% in the previous time period. In 2018, the final places in the top 5 were held by the Japanese at 7% and South Korea at 5%. The latter fell off the list in way of China, who now sits third with 10% and Japan is last on the top 5 list with 3%.

This has disproven the government introduced automotive production and development programme (APDP) from 2021 which intended to double industry production and employment by 2035. Local consumption for new vehicles still hasn’t recovered to pre-Covid-19 numbers with 2024 being a year of two halves courtesy of much uncertainty in the initial half due to elections. Stagnated at under 550 00 annually, Toyota CEO Andrew Kirby was one to tout that surpassing 600 000 units annually would serve as reassurance to investors and other manufacturers that the climate in the country is stable and profitable for heavy investment.

Related: Toyota Warns Subsidised Chinese Imports Could Further De-Industrialise SA

There are no shortage of manufacturers that produce here and capitalise on reduced production and shipping costs, but the creeping of subsidised Chinese vehicles has constantly served a reminder that the market is loyal for the best value for money available.

Thus, the picture is clear; vehicles produced in the East are taking the market by storm with their value-for-money propositions that even locally manufactured vehicles are struggling to keep up with. With his standpoint at naamsa, Tom went on to mention that the South African sales overview shows a rapid shift in consumer preferences to more value-oriented items that are difficult to rival with what he claims are our “BRICS friends.”

Tom openly stated he doesn’t believe protectionism will benefit the country or its consumers but considering the value the local automotive sector brings in terms of GDP and employment opportunities, he believes there needs to be another solution since the country consumes more now than it has in the past. He believes that to slow the deindustrialization down, South Africa should consider encouraging multiple manufacturers to consolidate a single production facility in an economic zone. The example given was Coega, where small and affordable vehicles popular in the market can be produced for a lower price. Isuzu already has an operational facility in the country, so it was alluded that this would be a good opportunity for other automakers who have subcompact crossovers and SUVs in their portfolios although the Japanese automaker could even consider assembly of the mu-X which hovers under 50 units a month and around 1 000 annually. While Stellantis is already committed to producing bakkies in the region, this would be an opportunity for them to capitalise on the SUV segment alongside the South Koreans and the likes of Suzuki.

While most have an understanding that to be feasible, production needs to hit thousands of units a month, this shared facility could be strategically calibrated to run shifts for each of several vehicles over a month to ensure it is being utilised effectively. Of course, this isn’t something that can be solved overnight and would likely take years and billions to get off the ground but there would be an obvious cost benefit to the complete assembly of vehicles for consumption in the SADC region and further afield in the continent. Tom also adds that this light manufacturing setup would also be a benefit for manufacturers to determine if a model line could be scaled up due to demand. This could be alluring for manufacturers who only have the means for a shared capital cost and potentially start with semi-knocked-down production before moving into anything more intensive.

In addition, the Isuzu head honcho went on to critique the ineffective trade across African countries and added that this needed to be addressed to enable South Africa as a hub for the continent, which is what Isuzu sees the country as.

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