Aug

FAW plans Africa growth strategy

2015-08-13 09:21
FAW CA3320 15m3 tipper trucks destined for Tanzania assembled in South Africa.

FAW Vehicle Manufacturers SA (Pty) Ltd recently launched its Africa growth strategy with the lowest-cost-per-ton truck on the SA market when it introduced its FAW 8.140 FL range. Marketing at an extremely competitive price and fitting into the medium segment by a slight weight margin, the vehicle has made an impact in the market with many querying FAW’s bold motives.

Yusheng Zhang, CEO of Vehicle Manufacturers SA (Pty) Ltd, explains: “The introduction into the medium weight category may have appeared ‘out of sync’ to the competition, with the depressed SA sales in that category. However, it is indicative of our emphasis on providing the best quality solution at the right price for the larger southern Africa region. It also forms part of our goal-driven strategy further north into Africa, beyond the SADC region even.

“There are many advantages of sourcing FAW products from our South African base – the most important being time-to-market in the northern countries, and of course for the SACD and AU, the added advantage which comes from the import/export duty agreements,” he adds.

“FAW SA plans to support sales in almost all the right-hand drive African countries. The left-hand drive African countries may still import from China directly. However, our plan is to assemble the left-hand drive vehicles to supply to the African Union countries in future, where they too can get duty advantages.

From the cost point of view, the African buyer can save complete vehicle import duty from 25% to 40%. Another advantage importing through FAW SA is that customers can get their vehicles within 30 days of order; much sooner than from China, which normally requires three months between order placement and delivery.

“Besides the special South African-spec vehicles, we also supply specifically modified vehicles for Africa. An example of this is the specially configured units which we exported early this year to Kenya – the five FAW J5P truck tractor units. Tanzania is able to use the same vehicle, and delivery of these orders are being finalised as we speak,” say Zhang.

“However, we remain circumspect on the drastically changing our local production complexity by adding too many different models produced at our Coega-based plant. It remains in our interest to keep our production plant simple, and to continue to maintain the highest levels of quality, rather than chase huge production diversity without adequate up-skilling and possibly a loss of focus on our core value – ‘Quality at a Fair Price,“ affirms Zhang.

Vehicle Manufacturers SA (Pty) Ltd does act as an import conduit on models not built locally. For example, in 2014 the Kenyan dealer sold about 650 FAW units of which the best sellers were the 6×4 truck, called CA4322. This model is their No.1 in their extra-heavy tractor segment, produced in China, and brought in through South Africa. To date the Kenyan dealer has purchased 45 units through FAW SA.

The Tanzania dealer sold about 1 000 units in 2014 of which their best sellers were the 6×4 tractor and 6×4 15m3 tippers. While most of the 2014 sales units were imported directly from China, the Tanzanian dealer has started this year to import a small number of trucks through FAW SA. So far, seven units have been dispatched from Coega, near Port Elizabeth, where the trucks are either assembled from CKD packs or come in as FBUs for export to Tanzania.

“For aftersales support, FAW SA is already supplying parts to those African dealers who import SA-spec models. Dealer who import African-spec models from FAW SA, still source their parts stock from China directly, because the purchase process is familiar to them and uptime in not affected.”

While FAW Vehicle Manufacturers SA continues to invest in its local aftersales operations, such as parts stockholding and training, it has no plans at present to expand parts stockholding into Africa.

This expansion into Africa also requires some support in customer workshops and customer technical training. FAW SA continues to give Africa dealers full technical support where needed. “Besides it is much more efficient than sending their technicians to China to get trained or to wait for FAW China to come to Africa to sort the technical problems,” adds Zhang.

Locally the FAW 8.140 FL range continues to draw high acceptance. “This range spearheads our overall attitude of offering cost-effective transport at an attractive price to a wide range of customers. Body configurations on this range, from the outset, include the drop-side, the van, a taut liner, a rollback, a 3,5m3 tipper, a dry freight transporter or an insulated bodied truck. A wide range, by any standards.

Yusheng Zhang explains: “One of the reasons for FAW’s success has been successful partnerships with so many other world class regions and organisations. We take our partnerships very seriously and we see our business relationship within Africa as one of the most important of these partnerships. Our fundamental vision for this region, using South Africa as a base, is ensuring that the FAW brand becomes a household name across the length and breadth of this great continent and in so doing, we hope to significantly contribute to job creation and the general stimulation of the local and African economies.

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