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Japanese-owned truckmaker Isuzu SA is two-faced. Not, I hasten to add, in the sense that it’s not to be trusted; but rather that it is trying to present two very different brand images to the buying public.
While it wants to retain a long-held reputation for producing sturdy, long-lasting “workhorse” vehicles, it now wants to add a “sexy” element to the brand. In addition to government and corporate fleets, its stock customer base, it wants to gain the attention of individuals seeking everyday vehicles that double up for commuting and leisure.
Toyota and Ford, through their Hilux and Ranger brands, have successfully bridged the divide. Now Isuzu, like Nissan and its new Navara, wants to do the same.
While Isuzu persists with its overall marketing message that “we’re with you for the long run”, the new D-Max promises a “bold new age”. Most media reviewers seem impressed with the vehicle’s design, power, comfort and handling.
Isuzu SA MD Billy Tom says: “We’re no longer directing our advertising exclusively at fleet managers. The brand now is also about lifestyle and influencers. D-Max is like a passenger vehicle but without compromising its traditional qualities.”
Nowhere is Isuzu’s split personality more evident than in this year’s R1.2bn launch of the latest D-Max — Isuzu’s biggest investment since buying out the local assets of General Motors (GM) when the US company disinvested at the end of 2017.
For while the seventh-generation vehicle is a design and technological leap from predecessors, the company continues to also build the sixth-generation version for those customers with more basic priorities, like a cheaper price and the ability to operate on lower-quality diesel. In some African markets, says Tom, fuel quality is so bad that service intervals are 5,000km apart, instead of the usual 15,000km.
Some buyers are less interested in state-of-the-art engine technology and comfort features than in endurance and reliability. Actually, says Tom, the new D-Max is just as strong on these, but it makes sense to provide customers with choice.
It’s not as if there isn’t space for both at the Struandale vehicle assembly plant, on the outskirts of Gqeberha. It has annual capacity to build 75,000 D-Maxes over three shifts but currently builds about 25,000, over one.
This year, Tom expects to sell about 20,000 vehicles in SA and export 5,000. That’s half the 50,000 minimum required to access the full range of investment incentives available to manufacturers under the 2021-2035 SA Automotive Masterplan.
The production split between the two D-Max generations is dependent on customer demand. When I visited Struandale recently, the split was 62% in favour of the new version. The previous one will be phased out eventually, but no-one is sure when. Some people in the plant will be relieved when it happens. Building two vehicle generations with very different designs, technology and components, in both left- and right-hand-drive, makes for complicated manufacture. Volumes don’t justify wholesale automation, so the plant is light on robots and heavy on humans. It’s very different to the heavily automated D-Max plant in Thailand, with capacity for 400,000 vehicles.
Isuzu SA engineers say Isuzu Japan was impressed with how Struandale’s upgrade was managed. Almost the entire process happened during Covid, so Japanese engineers were unable to personally supervise the investment. Everything happened online and through interpreters.
“We discovered this huge capacity to stand on our own two feet,” says technical operations head Dominic Rimmer. “It has done wonders for SA credibility.” Because previous D-Max models were built in SA by GM, “everything was taken for granted. The quality of this product has taken everyone by surprise.”
Struandale also builds medium and heavy commercial trucks for industrial customers. It may be relatively small in the local bakkie market, but Isuzu is a dominant player among truck brands. This year, Tom described Isuzu as “a truck company which happens to sell bakkies”.
In a historically low-volume market, Tom says Struandale will build about 3,600 trucks this year. “We could increase that to 4,500 if overseas suppliers could provide them,” he says.
In common with other SA truck companies, Isuzu assembles its vehicles from imported kits. Only a few components, like tyres and glass, are sourced locally. Volumes are too small to justify more localisation.
Local content is also a challenge for the D-Max. The automotive masterplan wants the average local content in SA-made cars and bakkies to rise from 40% to 60%. On the D-Max, it’s currently just over 30%. Tom’s predecessor, Michael Sacke, said 60% was impossible for Isuzu, given its volumes, and that 40% was a more realistic long-term target.
Tom won’t rule out 60% but says a lot will have to happen before it’s possible. Low as it is, local content, measured as a percentage of a vehicle’s ex-factory price, has increased with the launch of the new D-Max. The company spent R580m helping SA components companies tool up for the product.
With the aid of the Automotive Industry Transformation Fund, Tom says Isuzu has managed to add a number of black-owned companies to its supplier base. In one case, he says that after a long-term supplier closed its Gqeberha factory, Isuzu was surprised to find a suitable replacement in Komani (Queenstown), more than 360km away.
Komane Pitso, Isuzu’s head of commercial operations, says the company has 107 SA components suppliers. But he observes: “The SA automotive industry still faces tough challenges in accelerating localisation and developing a future-proof supply chain. Without localisation, the automotive industry will struggle to remain competitive.”
The solution for Isuzu, evidently, is to increase production. Tom is confident that the new D-Max will find more SA buyers than its predecessors. He’d like to add the new MU-X (Isuzu’s equivalent of the Toyota Fortuner and Ford Everest) variant to the local production mix: “It’s a big opportunity. The more product I get to build, the more scale I can create.”
Isuzu Japan has yet to be convinced. The previous MU-X did not sell as well as expected. One reason, according to Sacke, was that it was a mismatch for Isuzu’s then workhorse profile. If the D-Max can raise its brand status, the upmarket MU-X may be a better market fit.
A more immediate source of increased production may come from exports. Isuzu SA has been busy scouting out potential markets across Africa. It already exports vehicle kits to Kenya for assembly there. A joint venture in Ghana, also assembling Struandale-made D-Maxes, is expected to open in October. Tom says Ivory Coast is among other countries under consideration — if not for vehicle assembly, then at least for components.
“There is a great appetite for industrialisation in many of these countries,” he says. “Even if they don’t build vehicles, they are asking what role they can play in the production chain.”
Then there’s Ethiopia. It has Africa’s second-biggest population, after Nigeria, and almost no new-vehicle sales. Like Nigeria, it has motor companies salivating at the market potential. Unlike Nigeria, which has a well-worn reputation for failing to keep its industrial policy promises and causing foreign automotive investors to waste their money, Ethiopia’s main problem is political and social instability; there always seems to be a civil war or some other crisis to frighten off investors.
Isuzu already has a truck assembly partner in Ethiopia. “We’re suggesting that perhaps we can add some bakkies,” says Tom. “Ultimately, we must ask ourselves if the opportunity is bigger than the risk. We know there are problems. How can we be part of the solution?”
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.
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