Isuzu SA alive and well, says CEO Sacke

20th August 2018 By: Irma Venter - Creamer Media Senior Deputy Editor

Isuzu SA alive and well, says CEO Sacke

Michael Sacke

Isuzu is alive and well in South Africa, following the abrupt departure of General Motors (GM) from the country in 2017.

Following the US company’s exit, Japan’s Isuzu Motors acquired General Motors South Africa’s (GMSA’s) Struandale manufacturing plant, in Port Elizabeth – where GMSA assembled Isuzu bakkies per agreement for more than 40 years – as well as GMSA’s minority shareholding in Isuzu Trucks South Africa, and formed Isuzu Motors South Africa (SA)

Isuzu Motors SA will sell roughly 20 000 bakkies this year, including the newly launched mu-X sports-utility vehicle (SUV), plus around 4 000 trucks, says CEO Michael Sacke.  

This is a significant increase from the 14 000 bakkies and 4 000 trucks sold last year.

“In the year-to-date we are up 12.13% on bakkies, in a market that is pretty flat,” says Sacke.

Isuzu Motors SA was officially launched in February.

Sacke says the management team’s initial focus was to merge the Isuzu bakkie and Isuzu truck operations into a team of about 1 000 people.

“We had to change the IT system, the distribution network, contract our supplier base, change the corporate identity, change the culture of the business, keep the business going and retain our market share.”

Today, says Sacke, most of this work has been done. Changing the company culture, however, remains a work in progress.

The American corporate culture revolves more around rules, processes and control, he explains, while the Japanese – and especially Isuzu’s culture as a smaller manufacturer – is focused on minimal interference, empowerment, flexibility, and on fostering Isuzu Motors SA’s entrepreneurial spirit to create its own future.

African Presence
Isuzu Motors SA not only has responsibility for the local market, but also for sub-Saharan Africa. The company has 80 dealers in South Africa, and 35 in sub-Saharan Africa.

“They are all different,” says Sacke.

Some are only truck dealers, some are combined truck and bakkie dealers, while a number are also multifranchise dealers.

“We are aware that our dealers need scale and substance, so some of them need to sell more than Isuzu products,” says Sacke.

Sales in sub-Saharan Africa should reach around 3 000 units this year. Sales in the region are currently up 24.5% on last year.

Isuzu Motors SA will not be looking at exports beyond Africa, and neither will passenger cars – with the exception of SUVs – form part of its future.

This is why Isuzu Motors SA has no stated sales target for the future, says Sacke.

“We’ll be as big as our dealers need us to be. We contracted dealers around their business cases – whatever their total is, is our total.”

Isuzu Motors SA is, however, fully expanding its existing product offering in order to maximise sales opportunities. Bakkies and trucks can be sold as flatbeds, dropsides, refrigerated units and even hotel rooms on wheels.

“We can’t take the big guys head-on. They have bigger scale and bigger portfolios. We’ll have to find our niches and be excellent in those niches,” notes Sacke.

“We can’t chase the market. We need to grow organically by doing the right things.”

This also means that Isuzu Motors SA will not reach the 50 000-unit-a-year production target required to reap the full benefit from government’s Automotive Production and Development Programme (APDP), says Sacke.

While the company does currently draw benefits from the APDP, “we are discounted on those benefits because we are under 50 000 units”.

However, he adds, the company has engaged government on the Automotive Masterplan, which will dictate policy post-2020, when the APDP comes to an end.

“We have told government that we are at a disadvantage because we are small.”

Should Isuzu Motors SA cease manufacturing, larger manufacturers would fill up the company’s space in the market without creating significant additional employment, while government would still have to pay out benefits similar to that which Isuzu Motors SA is currently accruing.

“We have the sense that government understands this,” says Sacke. “We cannot just attract the big guys [to manufacture in South Africa].”

He believes Isuzu Motors SA will be “slightly better off” under the Masterplan than under the APDP.

“From the drafts we’ve seen, we are okay.”

This is because the Masterplan has more of a focus on local value-addition than production volumes, as is the case under the APDP, says Sacke.

Local content on locally built Isuzu vehicles is currently between 30% and 35%.

Aside from government incentive schemes, Isuzu Motors SA will also benefit from an African trade pact, says Sacke.

“Africa is our future. It will take some time to develop the market, but it has a lot of potential.”

Isuzu Motors SA exports vehicles to around 35 countries, with Kenya and Zimbabwe the biggest markets.