Toyota cannot say when it will reopen its Durban plant

Production has been suspended for more than two months due to flood damage.
Mud and fine silt left behind after the floodwaters hit has affected many pieces of electronic and mechanical equipment. Image: Dhiraj Singh/Bloomberg

Toyota South Africa Motors (TSAM) is still uncertain when it will be reopening its production plant in Prospecton near Durban, more than two months since it suspended production because of significant damage caused by the floods in KwaZulu-Natal.

TSAM manager of corporate public relations Mzo Witbooi said this week it is not clear at the moment when the plant will reopen.

“We are still busy with our recovery processes. We still have a lot of Japanese people at the plant, busy ordering some parts that we need for some of the robots as well as other tools,” he said.

Read:
Toyota suspends production at its Durban plant due to flooding
Toyota confirms extensive flood damage at its Durban plant

Jebb McIntosh, CEO of JSE-listed vehicle retailer Combined Motor Holdings (CMH), said during a presentation on CMH’s latest financial results last month that production at TSAM’s plant would be suspended for a minimum of 12 weeks.

McIntosh’s comments followed a senior executive at a local-based vehicle manufacturer telling Moneyweb the plant will only resume production in about four months and that the flood had caused an estimated R2.8 billion damage to the plant.

Read: Toyota’s flood damage: CMH says production down for at least 12 weeks

TSAM has to date remained tight-lipped about when production will resume, although it confirmed last month the company is likely to lose about 45 000 units in production, which means it has an idea of when production will resume.

The plant produces the Hilux, Corolla Cross, Quest, Fortuner and Hiace Ses’fikile.

Truck plant up and running

Assembly at the Hino truck plant, also at the Prospecton site, resumed on 23 May following a 40-day enforced shutdown because of the flood damage.

This resulted in Hino losing about 550 vehicles out of scheduled production, although its management team is confident they will be able to make up this shortfall by the end of the year.

Hino SA this week provided an insight to the problems caused by the flood damage and the difficulties in getting its plant operational again.

It said the major damage was caused by a wall of water and silt that came down the river next to the plant when the sluices at the overfull Shongweni Dam were opened.

Cleaning the mud and fine silt from the many pieces of electronic and mechanical equipment in the various production plants has proved extremely time-consuming.

Read: A ‘mountain of repairs to be made’ – Toyota SA CEO

None of the suppliers to the Hino plant were affected, but many supporting the car and light commercial vehicle plant suffered extensive damage to their own plants and equipment.

Hino SA vice president Ernie Trautmann said the resumption of production was “a wonderful reward for a Herculean effort by a dedicated team that included three specialists from Hino Motors in Japan who had prior experience in cleaning up and putting into operation factories damaged by tsunamis in Japan”.

Reassuring the market

TSAM has just released a television commercial in which it reassures its customers that it will recover from the devastating effects of the KwaZulu-Natal floods in April.

Leon Theron, TSAM’s senior vice president of sales and marketing, this week assured customers who have been impacted by this natural disaster that the company is doing everything in its power to get vehicles on order to their rightful owners.

“Our latest TVC [TV commercial] is also a vote of confidence to the local market for having made us the most popular automotive brand in South Africa for 42 consecutive years.

“We promise to come back even stronger,” said Theron.

Theron said early this month when the new vehicle sales statistics for May were released that TSAM was “quite content to have held on to the market leader position for another month since the temporary closure of our plant in Durban”.

“TSAM is also fortunate that its retail inventory includes a model for almost every segment. So naturally, when IMV [innovative international multi-purpose vehicles, Hilux and Fortuner] and locally-built Corolla models were affected by the situation at our plant, the imported models did well to sustain our business,” he said.

However, automotive executives at other vehicle brands expect a significant slump in Toyota’s new vehicle sales this month because of their belief that TSAM has sold all the available inventory it had of the vehicle models it produces locally.

TSAM sold a total of 6 664 vehicles into the domestic market last month compared to 4 778 units by second-placed Volkswagen and 4 331 units by third-placed Suzuki.

Automotive business council Naamsa only provides the aggregate sales figures for each vehicle manufacturer and no longer provides a breakdown of sales by models.

This means it is not possible to determine the impact of the suspension of production at TSAM’s plant on the sales of the models it produces locally.

But the total new vehicle sales of 8 952 units achieved by TSAM in April and 6 664 units in May – the two months for which sales figures are available since the flood – are significantly lower than TSAM’s sales in the first three months of the year.

Its total domestic new vehicle sales amounted to 12 480 units in January, 13 458 in February and 15 008 in March – an average of 13 648 units a month for the first three months of the year compared to only 7 808 units in the two months since the flood.

Export figures way down

The export sales figures reported by TSAM are also telling.

Naamsa reported that TSAM only registered 143 export sales in May.

By contrast, vehicle export sales by TSAM totalled:

  • 3 629 units in April

  • 6 837 units in March

  • 5 101 units in February, and

  • 5 516 units in January.

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