Isuzu to invest R1.2bn in PE plant

POPULAR CHOICE: Some of the sixth-generation Isuzu D-MAX on the production line at the Struandale plant in Port Elizabeth
POPULAR CHOICE: Some of the sixth-generation Isuzu D-MAX on the production line at the Struandale plant in Port Elizabeth
Image: Supplied

Japanese automotive giant Isuzu will invest R1.2bn in its Port Elizabeth plant to build the next-generation D-Max bakkie.

The deal is expected to generate an additional R2.8bn in orders from SA components suppliers.

Production of the new model is likely to start in 2023 when the current D-Max, launched in 2013, is due to reach the end of its life cycle.

Isuzu Motors SA chair Yoichi Masuda said on Monday the investment had been made possible by the government’s Automotive Production and Development Programme (APDP).

The programme is part of a broader SA automotive master plan, which requires the government to improve infrastructural and trade support to the motor industry.

Its first phase will expire in 2021 but an amended version, offering similar investment and production incentives, will run to 2035.

“We fully support the requirements of the extended APDP,” Masuda said.

“Our decision to invest in the production of the next-generation bakkie in SA demonstrates our commitment to this market.  

“This is further reinforced by the fact that this operation is the bakkie and truck manufacturing and distribution operation which is a 100%-owned Isuzu operation outside Japan.

“I would like to acknowledge the instrumental role the South African government has played in enabling us to successfully operate in this market since January 2018.”

It will help secure more than 1,000 direct jobs at the plant
Trade and industry minister Ebrahim Patel

Isuzu Motors SA consolidated its truck and bakkie manufacturing plants in 2018.

The manufacturing of the vehicles takes place at its headquarters in Struandale.

The company expects to build about 20,000 D-Max bakkies in 2019, rising to 29,000 in the next few years.

Isuzu Motors SA corporate affairs, business strategy and legal executive Denise van Huyssteen said the investment would see upgrades made to the manufacturing plant, along with new tooling.

The investment was being used from Monday.

“We have now officially kick-started the programme,” she said.

Single cabs, double cabs and extended-cab bakkies, assembled in both left- and right-hand drive, would form part of the new programme.

Asked about the R2.8bn expected to be generated, Van Huyssteen said: “This is the forecast for additional local [SA] content which will be generated over the life of the vehicle programme.

"This is over and above the current local content spend.”

The SA subsidiary came into being early in 2018 after buying the assets of General Motors SA (GMSA), which disinvested from SA at the end of 2017.

GMSA had previously built Isuzu trucks and bakkies on contract.

Trade and industry minister Ebrahim Patel said the investment showed confidence in SA’s economy and growth potential.

“It will help secure more than 1,000 direct jobs at the plant,” he said.

“The master plan, developed in partnership between the government and industry, provides a good basis for companies to plan and gives policy certainty on which investment decisions can be made.”

The Nelson Mandela Bay Business Chamber has also welcomed the announcement of Isuzu’s multibillion-rand investment in the Bay.

“Even more exciting is the additional total content value of R2.8bn which will be generated through the life cycle of the programme,” chamber CEO Nomkhita Mona said in a statement.

“As such, this is a welcome development as it not only reaffirms the company’s commitment to expanding its operations in the Bay but also sees the potential the city has as an investment destination of choice.

“But more importantly, it augurs well for the Eastern Cape as this is a much-needed economic boost for the employment-starved province.

“As the business chamber, we are encouraged by the company’s decision to reinvest in the city as this shows investor confidence.”

Japan’s ambassador to SA, Norio Maruyama, hailed the investment as  “concrete action”  at the SA Investment Conference last week.

“This is also an encouraging step towards the achievement of the objectives which were announced earlier this year at the TICAD 7 [Tokyo International Conference on African Development] in Yokohama, Japan.”

SA will initially serve as the main market for the D-Max bakkies, which will be rolled out later  to Sub-Saharan Africa.

Isuzu Motors SA CEO and managing director Michael Sacke said the bakkie would be locally engineered to meet the requirements of the SA and key Sub-Saharan Africa markets.

“Our customers have come to know our vehicles for their reliability, durability and flexibility, and it is important that we continue to build on these strengths,” he said.

Isuzu’s biggest markets in Sub-Saharan Africa include Kenya, Zimbabwe, Zambia, Mozambique, Mauritius, Senegal, Ghana and Ivory Coast.

In 2018, the company’s sales in these markets increased  17% on the previous year.