Hard hit by lingering economic drags

August Sales 370 Units

While the total sales of medium commercial vehicles in South Africa in August were hard hit by lingering economic drags, narrowing 6.3 percent year-on-year.

Isuzu Trucks South Africa [ITSA] managed a modest uptick in its share of the truck market for the month, securing 15.5 percent of the market through the sale of 370 vehicles.

ITSA COO Craig Uren, however, cautioned that the `rapid` decline in the truck market in the last three months suggested the market sales outlook of 32 000 units for 2015, which had been set at the start of the year, could be undershot by around 3 000 vehicles.

More Insight Isuzu Truck beefs up manufacturing capabilities with two PE acquisitions South Africa`s truck market growth cycle coming to an end, Isuzu warns 2015 truck market taking on dismal hue, warns Isuzu Trucks COO `This equates to more than the current 5 percent decline. We seem to be entering the end-of-year growth cycle that started in 2009. `If we are to preserve employment in a period where the economic pressures in our country continue to be a challenge on business and consumers, a very realistic approach to market expectations in 2015 and 2016 is needed to plan the assembly operations in our industry,` said Uren.

ITSA forecast yearly production of new chassis and cab units of 4 400 in 2015. Uren, meanwhile, acknowledged concerns around the future supply of quality steel, telling journalists during a media tour of the group`s newly acquired truck body manufacturing facility, in Port Elizabeth, this week, that domestic metal production was increasingly under threaten from cheaper Asian imports. `There is a concern that the quality of the steel will decrease . . . we`ve been buying from the local merchants, such as Mac Steel, but, in future, we`re not sure where they`ll get their metal from,` he said. He added that ITSA would be fine in an environment in which there were visible plans around future supply of high-quality steel; however, there were no such plans.

Notwithstanding these market concerns, ITSA retained an expansionary approach to its local manufacturing capabilities, last month announcing the acquisition of Port Elizabeth-based Kanu Commercial Body Construction and Automotive Chassis Technologies. This saw ITSA transitioning from a typical commercial original-equipment manufacturer [OEM] to an enterprise with the capacity to initiate and build products according to client specifications.

Uren added that becoming a market leader was `much more` than playing the role of a traditional truck OEM and pushing large volumes of semi-finished truck product beyond the factory gate. `The move to acquire these entities will centralise the process of buying our trucks, where everything will be processed from one central point of contact. `Our scope of work and business is no longer only focused on what leaves the factory gate. Together with our dealers and supplier base, ITSA will have a more integrated relationship with current and future customers in the life of their trucks,` Uren explained.

He added that a key component of the group`s strategy lay in an enterprise resource planning [ERP] system that had been tailored to match the demands of sourcing semi-knocked-down components from Japan. This extended further into integrating local componentry, product planning, database management, body/equipment suppliers and forecasting to name but a few of the many vital information flows in modern truck manufacturing, wholesaling and retailing. `It`s our ERP software that enables us to manage the supply of 550 new Isuzu trucks into the Johannesburg City Council tender within five months,` said Uren.

The automotive manufacturer would, meanwhile, retain a focus beyond South Africa`s borders, building on gains achieved in neighbouring States, such as Zimbabwe, where Isuzu had increased unit volumes by 250 percent year-on-year. Further opportunity had been demonstrated through the import of over 25 000 Isuzu trucks into Africa in 2014 and 2015, he held. `We have [also] established a new company, Isuzu Motors Sub-Saharan Africa, which is operating out of Johannesburg and will support Isuzu`s objective of becoming the top brand in Africa. `This includes the delivery of complete truck product solutions to market where we can ensure that the product quality and design is suitable for Africa, where we serve nine countries,` he commented.

Via engineeringnews


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