Toyota South Africa Motors (TSAM) has commenced production of virtually all its models at its Prospecton plant in Durban following the suspension of production on 12 April due to significant damage caused by flooding in April.
TSAM President and CEO Andrew Kirby confirmed this on Thursday, at the official opening of a R365 million expansion to the company’s parts distribution warehouse in Boksburg.
Kirby said “it feels like an eternity” since production at the plant was suspended, adding that TSAM started up its:
Catalytic converter export line and Hino truck production line in May;
The Hilux, Fortuner and HiAce production line last week; and
The Corolla Cross line this week.
“This is an important milestone and we will follow up with starting up the Corolla Quest production line next month,” he said.
“We are very anxious to accelerate our production volumes and, of course, are very aware that our customers have been waiting for quite a long time and we will do everything we can to try and address those back orders as fast as we can.”
Kirby said it is difficult to comment on the cost incurred due to the damage to the plant, but confirmed that it will be “in the billions”.
He said TSAM is covered for the equipment replacement and for some business continuity disruption but this is only a very small portion of the cost.
Kirby said the company has made some progress with its claims from insurance companies and has even received some advance payments. It is still in the process of reconciling with its insurers what that final figure will be and what TSAM’s final additional cost will be.
He said that because of the impact of the mud and flooding, the normal approach would have been to replace everything – but that would have taken another six to nine months, given the global situation with semiconductor shortages, shipping delays and equipment manufacturers that have significant back orders.
He said TSAM instead took a route of trying to source what it could from all over the world, with tremendous support from its colleagues in Japan, and embarking on a tedious process, especially with the plant’s electronic control units, of ensuring that every single component was cleaned, dried and tested.
He said this is important in the context of the ramp-up plan for the plant, because the company knows that over time not all of the repaired parts will be stable.
There is now a constant process of fitting and installing parts as they arrive.
Kirby said TSAM has therefore decided not to work any overtime until the end of September and will be using weekends to install a lot of the parts as they arrive.
“We thought this was the most appropriate approach to take, which means our start of production is not immediately to full production. We will ramp up over the next eight weeks and accelerate from there.
“We will have significant volume already in August because the lines will be up and running but it will not quite be where we want to get to.
“We will be back at the same volume as pre-flood at the end of September and we will obviously do whatever we can to address the [vehicle supply] backlog,” he said.
Turning to the parts distribution warehouse, now called the Toyota Africa Parts Centre (TAPC), Kirby said the investment in the facility is a reflection of TSAM’s commitment to both the South African economy and the automotive sector and follows its R2.6 billion investment in the launch and manufacture of the Corolla Cross at its Durban plant.
Kirby said the first phase of the 40 000m2 warehouse was opened a decade ago and the phase two development has doubled its size, turning it into a mega-facility measuring a colossal 80 000m2.
“This is equivalent to 11 soccer fields and makes it officially the largest automotive parts warehouse in the Southern Hemisphere.
“It also gives us some space to grow so the warehouse supports our current model line-up but also allows for the anticipated model growth towards to 2030.
“Importantly, it also supports our strategic direction of expanding into more markets on the African continent,” he said.
TSAM vice-president of customer services Anand Pather said the expanded warehouse houses about 2.7 million pieces of stock at any given time, with a monetary value of R900 million.
Pather said that in addition to ensuring a constant supply of parts to the 277 Toyota, Lexus and Hino dealerships in South Africa and the surrounding BLNE (Botswana, Lesotho, Namibia and Eswatini) countries, the TAPC has grown into a vital continental hub currently servicing 36 countries in sub-Saharan Africa and a further six international export markets.
TSAM senior vice-president of sales and marketing Leon Theron said the centre plays a huge role in supporting Toyota’s ambitious sales target in the local market.
“Our vehicle sales target for this year is 131 000 and that has a direct impact on this operation [parts supply and distribution]. If you look at parts, our sales revenue target is R7.2 billion this year. Parts play a key role when dealers and customers evaluate us,” he said.
TSAM is still the new vehicle market leader in South Africa despite the suspension of domestically-produced vehicles because of the flood damage.
It has achieved this by importing fully built-up models to maintain its local sales.
TSAM has sold a total of 64 001 vehicles year-to-date to June, for a market-leading market share of 25.2%.