Isuzu Truck South Africa recently revealed that Isuzu Motors Limited will be taking a 70% stake in the company, with GMSA remaining as a 30% shareholder. The official announcement was made following a high-profile board meeting at Isuzu Motors in Japan sealing the deal at the end of September 2013, with the purchase of 200 Isuzu Truck South Africa shares from GMSA planned for mid-October 2013.
In 2007 a landmark joint venture between Isuzu Motors Limited and General Motors South Africa (GMSA) was formed: a consolidated company, Isuzu Trucks South Africa (Pty) Limited.
According to Isuzu Truck South Africa’s Chief Operating Officer Craig Uren, this development has already resulted in new goals and possibilities. The resulting increase in capital was included in Isuzu Truck South Africa’s Mid-term Business Plan.
“With the announcement of the local shareholding change comes the requirement from Isuzu for Isuzu Truck South Africa to take more responsibility for the Sub Saharan Africa territory, and we’ve got some specific objectives to achieve,’ elaborates Uren. “We’re going to aim to enhance the Isuzu sales volume, provide better customer satisfaction, enhance life cycle business and stabilise the business in South Africa by strengthening the connection between Japan and South Africa.’
The motivation behind retaining GMSA’s 30% shareholding was to build on the strong relationship between Isuzu and GM. “We’ve asked GMSA to continuously involve in Isuzu Truck South Africa as an amicable partner, as we will continue to use GMSA’s infrastructure and resources for parts ordering and receiving, transportation of completed vehicles and vehicle assembly outsourcing,’ explains Uren.
It is important to note that Isuzu is not moving in the direction of cutting ties with GM in South Africa. “GM has been Isuzu Trucks’ important business partner, and we are not planning to take the business in a different direction,’ assures Uren.
Rather, he says that Isuzu Trucks’ South African business plan since 2007 has followed a similar path to that of Isuzu Trucks Australia’s development over the past 30 years. In Australia, Isuzu Trucks had similarly progressed from being a GM-Holden-owned business to a joint-venture between Isuzu and GM Holden, to a majority-owned Isuzu business.
“We modelled a lot of our business approach for what we want to do in South Africa based on what was done in Australia as there was a good track-record there. Where the various milestones were achieved there, we’ve been able to achieve in SA sooner than expected , that has a lot to do with the lessons learned in the business,’ reflects Uren.
This announcement marks the culmination of a number of concurrent phases of change within Isuzu Trucks’ local operations, bringing the company in line with its new responsibilities. One of these changes has been the training of recruits from Isuzu Motors, seconded to Is for training and orientation within the Sub Saharan business environment, ahead of deployment into the region. Here they will play a key role growing the Isuzu Trucks business model.
“Over the course of the last few months we have a bigger role to play for our assembly operation in Port Elizabeth. We’ve restructured and consolidated operations, working towards the creation of a wholly different and more efficient means of production,’ adds Uren.
These manufacturing changes have not only resulted in cost-efficiencies and increased productivity, but also boosted build capacity with an intense focus on quality , all thanks to the application of the Japanese philosophy of Kaizen (approximately translated as ‘˜change for the better’).
“This is a feel-good moment for the company against a local context that is full of negatives and economic challenges. The future for Isuzu Truck South Africa domestically as it grows its footprint and spreads its wings north into Sub Saharan Africa is very exciting,’ says Uren.
Although this announcement is significant for the company, as it strengthens the relationship between Isuzu Motors’ international headquarters in Tokyo and Isuzu Truck South Africa’s base in Johannesburg, it is important to note that there will be few evident changes ‘˜on the ground’ in South Africa.
Branding will be unchanged; the Isuzu Truck South Africa Head Office will stay at its current location in Johannesburg; existing contracts between Isuzu Truck South Africa and Dealers will continue; and warranties will remain consistent.
Outside of South Africa the announcement’s impact will be more noticeable, with Isuzu Trucks focusing on expanding opportunities across Sub Saharan Africa. Previously this was managed on an ad-hoc basis by various Distributors and Dealers.
“There are existing truck assembly operations with GM in Nairobi for right-hand drive trucks, and we’re in the process of determining what to do for West Africa,’ adds Uren. “That’s a function of product specification. We could source product from anywhere and ultimately there will always be a solution.’
The existing export of trucks into right-hand drive neighbouring countries will however be enhanced by the announcement, because Isuzu Truck South Africa will now have more flexibility in terms of matching trucks’ specifications to the specific market requirements in various countries.
“Up to now our SADC neighbours have had to sell what we have, which is restricted by the high level of Euro emissions standards that South Africa complies with. Going forward, if we provide a different level of product that is more suitable given the fuel quality issue across Africa, it can only help those dealers to be competitive and provide a better range of vehicles,’ says Uren.
“The power of the Isuzu Motors’ parent company will give us and our customers increased confidence that we’re not flying the Isuzu flag on our own as a territory: we now have the full backing of the whole Isuzu Motors organisation,’ he concludes. “Africa is seen as a vast opportunity for growth in commodities and investments, and we are looking to secure significant market share in the Sub Saharan region.’