Companies / 6 February 2014, 12:00pm / Suren Naidoo
Japanese motor giant Toyota has shown its confidence in Durban and KwaZulu-Natal by pumping more than R1 billion in new investment into its Prospecton manufacturing hub in Durban.
And it is eyeing further investment if plans for an automotive supplier park and new car terminal adjacent to the proposed dig-out port are realised.
Toyota South Africa Motors boss Johan van Zyl, with Toyota executives from Japan and KZN Premier Senzo Mchunu, launched the production line for the new generation Toyota Corolla on Tuesday.
The latest capital investment was used to upgrade the production line to produce the Corolla.
This is the biggest foreign investment in the automotive sector in Durban since Toyota spent R8bn on a major expansion and opening of a new paint plant at Prospecton in 2008.
It comes despite a four-week strike in the motor manufacturing industry in September, which brought production to a halt. The strike was followed by another strike in the automotive components sector, which together reportedly cost the industry more than R20bn and saw German luxury carmaker BMW declare it was not considering South Africa for the production of a new model.
The investment by Toyota – the country’s biggest vehicle exporter which operates the largest motor manufacturing plant on the continent (in Durban) – is seen as a timely vote of confidence in the industry.
“The decision to invest in the production of the new Toyota Corolla is one taken well in advance of the start of production and one that considers the future economic prospects of South Africa and those of major Corolla export markets.
“We believe that despite the current economic slowdown and currency pressures, the South African-built Corolla will prove to be a good long-term investment for Toyota,” Van Zyl said.
But he warned that production disruptions needed to be averted to rebuild the local industry’s reputation globally as a stable motor manufacturing hub.
“This investment is the second to be announced by Toyota in the current phase of capital expansion that started with the R363 million new parts distribution centre in Gauteng in 2012. It follows an R8bn investment programme that was completed in 2008 that saw Toyota’s annual local production capacity increase to 220 000 units.
“The Corolla is the first new model vehicle to be produced under the government’s new Automotive Production and Development Programme incentive,” he said.
Toyota’s investment was welcomed by the KZN premier and local business leaders.
“The provincial government is committed to working with Toyota South Africa to strengthen the automobile sector in the country by using the planned dig-out port as a catalyst… We are exploring the establishment of an automotive supplier park a few kilometres from Toyota’s plant, at the back of the proposed dig-out port on the site of the old Durban airport,” Mchunu said.
Negotiations with Toyota in Japan started in 2012 to persuade their automotive suppliers to consider setting up operations in the proposed park.
Durban Chamber of Commerce and Industry chief Andrew Layman said Toyota’s investment was “absolutely great news”.
“Let’s hope this adds impetus to the automotive park development, which has been on the table for ages, and perhaps another major vehicle manufacturer or two,” he said.
Durban Automotive Cluster facilitator Douglas Comrie said the scale of Toyota’s investment was of tremendous significance to KZN.
“This investment also represents an opportunity to unlock investment in the automotive supply chain. International experience in this field clearly shows this has the potential to become a significant generator of employment-creation opportunities.”
He added: “The establishment of an automotive supplier park is therefore welcomed by the Durban Automotive Cluster as it is seen as one of the key steps in unlocking this further investment by automotive suppliers.”
The automotive park plan, however, has been mooted by three consecutive KZN premiers. Questioned by The Mercury, Van Zyl said Toyota was in full support of the dig-out port and the supplier park was critical for the further growth of the sector.
“The supplier park would enhance Toyota and the industry’s competitiveness… We would have liked it to happen years back when it was first proposed. But now, with the port plans that include a new car terminal for exports, we are confident. It will unlock further investment,” he said. - The Mercury