Delays at TSAM to continue for three months - CMH

It appears increasingly likely that Toyota South Africa Motors’ (TSAM) production plant in Prospecton south of Durban will not resume production for at least 12 weeks while clean-up operations take place at the plant.

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The disruption to production will have a significantly negative impact on supplies of vehicles produced at the plant to dealerships.

TSAM suspended production at its plant on April 12 this year because of extensive flood damage, and the company has not yet indicated when production will resume.

However, Jebb McIntosh, the chief executive of JSE-listed vehicle retailer, Combined Motor Holdings (CMH), said this week during a presentation on the company’s latest annual financial results that: “The Toyota factory is down for we believe a minimum of 12 weeks.”

McIntosh adds that this will “take quite a big chunk out of the South African market because they are the biggest supplier”.

“Dealers will not get stock in those particular models for the next 16 weeks because if they are out for 12 weeks, it will take them four weeks to replenish the supply of stock.

“So that is going to have quite a big knock-on effect this year and could benefit some of Toyota’s rivals if they have the required stock,” he says.

Leon Theron, the Senior Vice-President at TSAM, said last week that delivery of locally built models would be negatively impacted in the short term by the suspension of production but that plans have been put in place to prioritise existing orders for customers.

“We really appreciate the patience exhibited by our customers. Yes, Hilux, Fortuner, Corolla Cross and Quest orders are going to take a little longer but please be assured that they will be filled the moment our new supply kicks in.

“As far as imported models go, it’s business as usual,” he says.

The disruption to production at TSAM’s plant is already having a knock-on effect on its suppliers.

Metair Investments, the JSE-listed automotive components and energy storage solutions manufacturer, which is a major supplier to TSAM, released a statement via the Stock Exchange News Service (Sens) on Thursday stating that while the impact of the floods on Metair’s facilities was minimal and operations had promptly returned to normal, a major Original Equipment Manufacturer (OEM) customer of the group advised that it suffered significant damage to its plant, with production suspended for clean-up operations and assessments to be carried out.

Metair says there is no certainty yet on the timing of production coming back online at the plant of the OEM, which it did not identify, but Metair’s automotive components vertical “expects a material reduction in demand for its products until then”.

“Metair has insurance in place and has initiated a business interruption claim, which would limit the impact to the automotive components vertical’s earnings.

“Metair will also work with the affected OEM to support its recovery and any recoupment of lost production.

“Lastly, Metair is in close contact with its funders to maintain sufficient short-term liquidity until the situation stabilises,” it says.

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