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If you are planning an end-of-year vacation overseas, the Rand’s slide into weakness on international currency exchange markets hasn’t been great.
But for those automotive brands with local production facilities, a weakening Rand means big business.
Local operations
South Africa’s automotive industry has become agile enough to respond to react sudden Rand movements with a shift in production.
READ: Here's how many bakkies have been sold in each province so far this year
When the Rand rapidly weakens, those manufacturers who can prioritise their local operations for the export market, to maximise profits per vehicle built and shipped offshore. The influence of ramped-up export volumes is perhaps best illustrated in the 30% sales discrepancy between Toyota’s Hilux and Ford’s Ranger in September.
Total production versus local distribution
South Africa’s bakkie rivalry between Hilux and Ranger is a fascinating clash and one which excellently illustrates how one manufacturer can prioritise domestic business, whilst another sacrifices local sales to leverage its export markets.
Image: Quickpic
It all depends on where business managers believe they can best harvest profits. What makes Hilux and Ranger so comparable is that they both have strong local demand and committed export programmes.
If we isolate the domestic market, Hilux was clearly dominant last month, selling nearly a third more bakkie volume than Ranger. Some of that success is certainly attributable to the expanded Hilux range, which is now an incredible 42 derivatives strong, and saw September as its first substantive month of sales with the broader bakkie offering.
But what about total Hilux and Ranger production in the South African factories for September? Do those numbers also yield a 30% advantage to Toyota? Not quite.
Image: Supplied
If you add up all the Rangers built for export and those processed through Ford’s South African distribution channel, the number for September is 9563 bakkies. Toyota’s total domestic sales and export units for the same period total 7766 bakkies.
That’s a 23% advantage to Ford South Africa. What the numbers tell us is that Ford has made a specific decision to prioritise its Ranger export production, which is why they managed to ship 6547 bakkies out of South Africa, compared to Toyota’s 3823 Hilux exports.
Different brands will have diverse export goals but when the Rand really slides into near oblivion, those who can, rachet-up their exports to try and balance the accounts.
Image: Ford
Toyota’s domestic dominance remains seemingly unassailable. The decision to serve local customers first with product from the Prospecton factory, after the launch of a huge Hilux model range update, is entirely understandable. With the upgraded Hilux range settled in production after launch, Toyota can now calculate its export strategy.
South African manufactured bakkie export growth has been curtailed with weaker trans-African demand, due to stunted economic growth and bakkie demand – especially from oil-commodity economies north of South Africa.
With the oil price ticking-up over the last few weeks, that trends could perhaps spur Toyota South Africa into a similar export drive to what Ford has initiated with Ranger, as dormant African market revitalise.
