Picture: ISUZU TRUCKS SA
Picture: ISUZU TRUCKS SA

Isuzu and UD will remain separate truck brands in SA despite their proposed global consolidation, new UD Southern Africa MD Filip van den Heede said on Tuesday.

Though the deal could lead to product rationalisation, he said the two brands would retain their separate identities.

Swedish truck company Volvo announced in mid-December that it plans to sell UD Trucks to Isuzu for $2.3bn. The deal is part of an alliance in which Volvo and Isuzu will share electric and self-driving truck technology and use their combined muscle to drive down development costs.

Isuzu and fellow Japanese brand UD are both significant players in the SA truck market, which grew slightly in 2019. This was due mainly to a 10.6% improvement in sales of light-duty trucks, as many customers bought down into smaller vehicles.

UD MD Rory Schulz said: “Transport operators continue to face severe cost pressures, with fluctuating diesel prices, safety of drivers and trucks, as well as instances of civil unrest, hitting many operations hard in the past year.”

Van den Heede, who replaces Gert Swanepoel, said decisions on the SA relationship between Isuzu and UD will have to wait for completion of international due diligence and local approval of the deal by competition regulators.

While there is some overlap between the two brands’ products, he said it is too soon to talk of rationalisation. Similarly, he said it is premature to speculate on the two brands working together in SA to use more local parts in their vehicles.

The average local content for SA-made cars and bakkies is at nearly 40% but in trucks it’s below 10%. The government has suspended plans to force truckmakers to source more parts from local suppliers after being persuaded it is not cost-effective. Where seven car and bakkie companies build 600,000 vehicles, more than a dozen truck companies produce about 27,000.

Schulz said the local truck market will remain flat for the next couple of years as the economic downturn continues to deter buyers from spending money. “We expect the market to be about 27,000 again in 2020.” 

furlongerd@businesslive.co.za