The government is driving a process to localise mini-bus taxi manufacturing in SA – a move that has resulted in Toyota SA Manufacturing (TSAM) entering into discussions with the DTI and Nissan SA, indicating it will re-enter the taxi market. The government drive follows recent Cabinet approval of amendments to the procurement policy framework regulations, which will allow the DTI to designate sectors and sub sectors of the economy for domestic production, at specified levels of local content. Francois Truter, DTI Director of Investment Projects, confirmed part of the department’s discussions with TSAM related to conditions for the company to manufacture taxis locally. Truter believed standards, including emission control and safety standards, would “start playing a big role” in assisting local companies to manufacture taxis.
“There is a big issue around safety standards on some taxis. We need to ensure safety standards are adhered to.” Truter believed Toyota would “most probably” be a significant player in local taxi manufacturing and “assumed” they would be followed by Nissan, while some Chinese manufacturers were also possible. He continued that research was currently being undertaken to designate the range of sectors for domestic production at a specified level of local content, in line with the procurement policy framework regulation amendments. He confirmed that one sector, for example, could be the taxi industry, adding that the first designation for local procurement would be done in a few months, without specifying which sector that would be.
According to Truter, this was “a great breakthrough” because procurement had been very challenging for government. He referred to the acquisition prior to the 2010 FIFA World Cup of more than 1 000 buses manufactured in Brazil, stressing that these buses could have been manufactured in SA. Truter said the DTI was: “very serious in seeing how it could take this forward.” He continued that the Industrial Development Corporation (IDC) had been asked to review its business model, and had identified R66bn over the next five years for investment in the new growth model and the Industrial Policy Action Plan (IPAP2) sectors. According to Truter, the department was intent on ensuring taxis were produced in SA, and this would be achieved through “government pressure” with the first taxis produced here from the middle of next year.
Johan van Zyl, President and CE of TSAM, confirmed it was in an advanced stage of discussion with the government and various other stakeholders to localise the production of the Ses’fikile and Quantum in South Africa. He stressed however, that these discussions were still dependant on “certain conditionalities and the finalisation of a viable business case”. “If completed successfully, we will be in a position to make a public announcement.” Van Zyl said he was unable to comment on the “conditionalities” and TSAM was waiting for the DTI to come back to it, but did not have any “timeline” on when this would happen.
Annual sales of mini bus taxis peaked a few years ago at about 20 000 units, which is insufficient to make local production viable, however, Van Zyl said the mini bus was extensively used as taxi’s in Africa, and there “definitely is a market for them” in Sub Saharan and North Africa. Mike Whitfield, Nissan SA’s MD, confirmed it would be re-entering the taxi market and was currently studying opportunities in this market. He said the decision on whether it will be through locally assembled or fully imported vehicles was “still under study internally”. But he confirmed one of the objectives of the DTI was to promote local production. “We are not in the taxi market at the moment, but with our product offering will enter the taxi market in about a year and a half. Right now it does not make sense to assemble [taxis] locally.” Whitfield confirmed in March this year that Nissan SA aimed to more than double production at its assembly plant in Rosslyn to 100 000 units a year, by 2015.
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