KZN govt tries to allay fears as Toyota threatens to leave province following violent unrest

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Toyota SA expects sales to drop by as much as 10% in July due to the unrest in KZN.
Toyota SA expects sales to drop by as much as 10% in July due to the unrest in KZN.
  • Toyota has raised concerns with local authorities regarding the impact of the unrest and looting in KZN on the global giant's operations and investments in the area.
  • On Monday, Toyota said it has received a positive response to the concerns it raised.
  • The unrest impacted Toyota's manufacturing operations in Durban as well as key exports.

The eThekwini and KwaZulu-Natal (KZN) governments are trying to allay the Toyota Motor Corporation's (TMC) uncertainty about the future of its operations and other investments in the province in the aftermath of last week's widespread violence and looting.

Production at Toyota's plant in Durban - both day and night shifts - is expected to restart on Tuesday.

Toyota's plant in Durban manufactures its Hilux, Fortuner and Corolla Cross models. From November 2021, it will start manufacturing Corolla Cross (small SUV). The plant also assembles HiAce and Hino trucks. About 7 200 people work there. 

On Thursday, Toyota sent a letter to the eThekwini municipality requesting an action plan from the local government. On Monday, Toyota told Fin24 that it has since received a positive response from the city and the province in the form of a recovery roadmap. This has gone a long way to assuage the fears of its parent company TMC, headquartered in Japan.

On Monday, the eThekwini municipality responded to Fin24, acknowledging receipt of the letter from Toyota.

"The city leadership will meet with the corporate sector this week and we will issue a statement after that meeting," the municipality said.

According to Toyota, the focus of the letter was a plea for a definite plan of action from the local authorities. The aim was to save jobs and prevent disinvestment.

In the letter to eThekwini, seen by Fin24, TMC's chief operating officer for the Africa region, Toshimitsu Imai, notes the company's concern about the incidents of looting and destruction of property in the city during the unrest.

Safety first

"A key priority for Toyota is the safety and welfare of our employees, their families and the communities within which we operate. The safety and harmony within this ecosystem is a fundamental value we strive for because it enables us to be a successful business and thereby contribute to the communities and economies within which we operate," states the letter.

"Unfortunately, the incidents in Durban have left us feeling very uncertain about the future of our business in KZN. Our manufacturing operations in the south of Durban were forced to close and have remained closed since Monday 12 July. We are uncertain as to when it will be safe enough for us to resume operations."

The forced closure of operations in Durban is jeopardising Toyota South Africa's future sustainability as it recovers from the impact of the Covid-19 pandemic, the letter cautions.

Furthermore, export volumes into Europe have started increasing, but now the loss of production in Durban over the past week might mean a loss of business for the local company as other global Toyota affiliates will jump at the opportunity created. The unrest also impacted the ability to export vehicles from the plant and the closure of the N3 impacted deliveries to Gauteng.

Toyota SA expects sales to drop by as much as 10% in July. The local company is also in the final stretch of preparing for the launch of its first locally produced new energy vehicle later this year. The aim is to demonstrate its ability to produce other alternative energy vehicles in Durban. 

"However, given the uncertainty around the current unrest, they risk missing key deadlines and the opportunity to challenge for other new products," states the letter.

It also states that Durban and KZN's ability to show clear plans of how it will restore stability will be a key decision element for Toyota when deciding on new investments.

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