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Toyota CEO warns on SA policy

David Furlonger furlongerd@businesslive.co.za

Growth in new-vehicle sales will slow dramatically until SA stops “shooting itself in the foot”, Toyota SA CEO Andrew Kirby said on Thursday. He predicted that the market for cars and commercial vehicles would improve 7.8% in 2023 — barely half the 14% growth rate of 2022.

Growth in new-vehicle sales will slow dramatically until SA stops “shooting itself in the foot”, Toyota SA CEO Andrew Kirby said on Thursday.

He predicted that the market for cars and commercial vehicles would improve by 7.8% in 2023, to 576,000 from 528,963 last year — barely half the 14% growth rate of 2022 and one-third of the 22% recorded in 2021. While both the earlier figures owe much to the recovery from the Covid-19 market depths of 2020, Kirby said the 7.8% could be exceeded were it not for SA’s energy crisis, unemployment, crime rate, rising interest rates and painfully slow GDP growth rate.

Indeed, it could be argued that the market slowdown is worse than the 7.8% suggests. Kirby reckons that without shortages of Toyota stock as a result of floods that closed the company’s assembly plant at Prospecton, Durban, for four months, plus limited supplies of other brands’ models caused by global components shortages, the 2022 market could have hit 560,000 vehicles.

His 576,000 forecast for this year is just 1.5% more than that. Even with the Durban plant approaching full capacity again, Kirby said customers faced waits of up to five months for new Hilux bakkies and up to a year for hybrid Corolla Cross cars with dual petrol and electric engines.

Kirby is also anxious for the government to show its hand on electric vehicles (EVs). Many of the Hiluxes built at Prospecton are exported to Europe, where sales of vehicles with petrol and diesel internal combustion engines (ICE) will be outlawed in the next few years.

He said Toyota SA had begun discussions with its Japanese parent company about including electric versions in the next generation of the vehicle.

“If we want to retain these exports, we have to build a clean Hilux,” he said. “It will have a big impact on the economy if we lose that contract.”

The department of trade, industry & competition has been dragging its heels on announcing a strategy to encourage local

EV manufacture and sales. It was due to have published a policy white paper in October 2021, but minister Ebrahim Patel has said it now plans to do so next month, to coincide with finance minister Enoch Godongwana’s national budget speech.

Industry executives say delays are jeopardising potential foreign investment in the SA motor industry.

Kirby said he hopes the announcement will include buyer incentives to make EVs affordable, as has been the case in most countries where EV sales have flourished.

However, “we don’t think that will happen”, he said. Patel has stated that his department prefers direct manufacturing incentives to encourage local production.

Kirby said he expected 20% of Toyota sales in SA by 2026 to be EVs. Combined, he said the Toyota brand and its upmarket

Lexus cousin already accounted for nearly 80% of SA EV sales.

Most of these were hybrids. Sales and marketing head Leon Theron said Toyota SA drastically underestimated demand for the hybrid Corolla Cross when it was launched in 2021.

The car is also available with a standard petrol engine and the company expected only 12% of demand to be for the hybrid. In the event, it is over 50%.

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2023-01-27T08:00:00.0000000Z

2023-01-27T08:00:00.0000000Z

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