New truck assembly plants create new freight opportunities

A growing number of truck assemblers are investing in South Africa in order to establish a footprint for expansion into the African market and to compete in the heavily traded South African market. This is creating opportunities for logistics companies and is giving transport operators greater choice. Hauliers and other medium and heavy vehicle operators in South Africa have at least 22 suppliers from which to choose. Long-established brands such as Mercedes-Benz, General Motors and UD Trucks are facing increasing competition from relative newcomers such as India’s Tata and Chinese original equipment manufacturers Powerstar and FAW. Truck assembly plants are relatively low level investments compared to passenger vehicle factories. A new assembly facility for Hino Trucks opened in Prospecton in June this year at a cost of around R55 million, according to Toyota South Africa. Earlier this year Chinese company FAW opened a plant in Port Elizabeth which, it claims, represented an investment of R600 million. In September Hyundai Automotive South Africa announced the investment of R110 million in a Johannesburg plant that will begin assembling the HD65 and HD72 mid-size models followed by H100 pickups in January. Heavy commercials are being assembled by the likes of Volvo, Mercedes-Benz and UD Trucks. Volvo relocated its truck plant from Botswana to Durban in 2005. The expansion of truck assembly in South Africa means that there is a greater demand for the importation of kits rather than fully built up vehicles. Medium and heavy commercial vehicles are recognised by government as productive assets and major economic cost drivers. Therefore the level of protection on these vehicles has been set at 20% ad-valorem, which is lower than the level on light commercial vehicles and passenger cars, according to the 2014 South Africa Automotive Export Manual published by the Automotive Industry Export Council (AIEC). “Assembly operations of these vehicles are characterised by the duty-free importation of all the drive line components, which include the engines, transmissions, drive-axles and gear boxes,” it says. CAPTION FAW's Port Elizabeth plant... giving transporters greater choice.