SUSTAINABILITY REPORT - TOYOTA SOUTH AFRICA MOTORS
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Toyota_Page 1_28 November 2019_Proof 9 SUSTAINABILITY REPORT T O Y O TA S O U T H A F R I C A M O T O R S Challenge 2050
Toyota_Page 2_28 November 2019_Proof 9 Toyota South Africa Motors (TSAM) is a well-governed South Africa’s company which ensures the sustainability and approach to upliftment of the societies in which we operate as well as providing robust environmental stewardship. TSAM’s sustainability report aims to provide our stakeholders with a transparent overview of our social, environmental and governance Toyota performance for the period 1 April 2018 to 31 March 2019. REPORTING TSAM is wholly owned by The report covers our operations in We are committed to improving Toyota Motor Corporation Durban, Sandton and Atlas. It also the report’s quality and its (TMC). As such we are guided outlines the performance of our accessibility to our stakeholders. by the vision and strategy of brands (Toyota, Hino and Lexus) This report is available in print and and our activities relating to our key online at www.toyota.co.za. TMC and we encourage you to internal and external stakeholders. read further about how Toyota TSAM values feedback from its There were no significant changes embraces sustainability globally stakeholders on our Sustainability during the reporting period to the at: http://www.toyota-global.com/ Report. Any questions or feedback size, structure or ownership of TSAM. sustainability/report/sr/. regarding this report can be The report’s structure and content directed to: is aligned with TMC’s Sustainable Toyota Motor Corporation (TMC) Management Report and international Charmaine Reddy best practices as set out by the Company Secretary and Legal Adviser Global Reporting Initiative (GRI). creddy3@tsb.toyota.co.za Toyota South Africa (TSA) The performance data is reported to facilitate comparability to our previous Toyota South Africa Motors (TSAM) year’s report.
Toyota_Page 1_28 November 2019_Proof 9 Toyota South Africa’s approach to reporting ...... IFC Our performance summary .................................. 2 Toyota’s global vision ............................................ 4 24 SOCIETY Customer and quality first ............... 26 Collaboration with business partners ........................................... 32 Employees ....................................... 40 Social contribution activities ........... 50 56 An introduction to TSAM ....................................... 6 Chief Executive Officer’s message ....................... 8 Our brands .......................................................... 12 Our material matters .......................................... 22 Our material issues ............................................ 24 ENVIRONMENT Our approach ................................... 57 Structure .......................................... 57 TOYOTA SOUTH AFRICA MOTORS Emissions reduction ........................ 58 Resource efficiency ......................... 62 Society in harmony with nature ....... 64 69 GOVERNANCE SUSTAINABILITY REPORT 2018/19 Approach and structures ................. 70 Board of directors ............................ 72 Committees ..................................... 72 Ethics ............................................... 74 Risk management ............................ 76 1
Toyota_Page 2_28 November 2019_Proof 9 our PERFORMANCE SUMMARY Shareholders 2018 2017 2016 Total domestic sales: Toyota, Lexus and Hino (units) 133 603 129 073 117 071 Passenger car sales: Toyota and Lexus (units) 70 170 125 326 113 525 Light commercial vehicle sales: Toyota (units) 60 231 54 952 36 609 Medium commercial vehicle sales: Hino (units) 1 711 1 717 2 112 Heavy commercial vehicle sales: Hino (units) 1 491 882 1 367 Automark used vehicle sales (units) 50 399 46 545 45 083 Export units: Toyota 52 528 43 776 53 322 Customers and quality COMPETITIVE CUSTOMER EXPERIENCE (%) 2018 2017 2016 Toyota 93.6 92.7 92.8 Lexus 95.1 92.1 91.6 Business partners Suppliers TOYOTA SOUTH AFRICA MOTORS 2018 2017 2016 Number of ISO14001-certified suppliers 149 132 112 Dealers TOTAL DEALERSHIPS 2018 2017 2016 Toyota 194 194 1 198 Lexus 19 191 17 Hino 66 66 2 65 SUSTAINABILITY REPORT 2018/19 Automark 191 190 187 1. Full dealers (South Africa, Botswana, Namibia, Lesotho, Swaziland (eSwatini)) 2. All dealers (South Africa, Botswana, Namibia, Lesotho, Swaziland (eSwatini)) 2
Toyota_Page 3_28 November 2019_Proof 9 Employees 2018 2017 2016 Headcount (full-time employees) 7 378 6 690 6 927 Fatalities 0 0 0 Total injury frequency rate 1.50 1.64 1.62 Social contribution 2018 2017 2016 Total social investment (Rm) 22.9 23.2 17.3 Dti Broad-based Black Economic Empowerment (B-BBEE) contribution level 7 8 8 Environmental stewardship 2018 2017 2016 Production emissions (kilotonnes CO2) 129.5 130.6 140.7 Carbon intensity (kg CO2/vehicle manufactured) 930.49 966.96 1 014.78 Water intensity (kl/vehicle manufactured) 4.73 4.79 5.01 Waste intensity (kg/vehicle manufactured) 20.04 18.74 18.26 TOYOTA SOUTH AFRICA MOTORS Volatile organic compounds (VOCs) emitted (g/m2 body paint applied) 18.44 17.92 19.90 SUSTAINABILITY REPORT 2018/19 3
V Toyota_Page 4_28 November 2019_Proof 9 TOYOTA’S TSAM acts in accordance with TMC’s Guiding GLOBAL Principles to produce reliable vehicles and to sustainably develop society through constant VISION innovation and the provision of high-quality products and services. Toyota is striving to go beyond automobiles by becoming a mobility company. Our goal is to provide mobility for all, bring joy and freedom of movement to all people. Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet we aim to exceed expectations and be rewarded with a smile. We will meet challenging goals by engaging the talent and passion of people who believe there is always a better way. TOYOTA SOUTH AFRICA MOTORS The Toyota Way The Toyota ReBorn We conduct business-specific methods and values: strategy Continuous improvement: We are never satisfied with where we are and During 2016, as part of a consistently seek further knowledge to pursue higher values. worldwide TMC initiative, TSAM launched the ReBorn strategy. Respect for People: We respect all Toyota stakeholders and believe that the This strategy is aimed at listening growth of each employee will connect to the success of our business. and responding to the ‘Voice of Five values support the Toyota Way, namely: the Guest’ and living our guest- SUSTAINABILITY REPORT 2018/19 Challenge: We form a long-term vision, meeting challenges with courage and 1. first value throughout everything creativity to realise our dreams. we do, from sourcing components Kaizen: We improve our business operations continuously, always driving for 2. to manufacturing, engaging guests innovation and evolution. and after-sales service. Each operation assumes responsibility Genchi Genbutsu: We go to the source to find the facts to make correct 3. decisions, build consensus and achieve goals at our best speed. for defining and implementing their own ReBorn strategy and playing Respect: We respect others, make every effort to understand one another, 4. their part in contributing to the take responsibility and do our best to build mutual trust. success of TSAM. Teamwork: We stimulate personal and professional growth, share the 5. 4 opportunities of development and maximise individual and team performance.
Toyota_Page 5_28 November 2019_Proof 9 Guiding Principles at Toyota The Guiding Principles at Toyota reflect the kind of company that Toyota seeks to be, in light of the unique management philosophy, values and methods that it has embraced since its foundation. TMC, together with its consolidated subsidiaries, hopes to contribute to sustainable development through its corporate activities, based on understanding and sharing of the Guiding Principles at Toyota. 1 5 Honour the language and spirit of the law Foster a corporate culture that enhances both of every nation and undertake open and fair individual creativity and the value of teamwork, business activities to be a good corporate while honouring mutual trust and respect citizen of the world. between labour and management. 2 6 Respect the culture and customs of every nation and contribute to economic and social Pursue growth through harmony with the global development through corporate activities in their community via innovative management. respective communities. 3 7 Work with business partners in research and Dedicate our business to providing clean and manufacture to achieve stable, long-term safe products, and to enhancing the quality of growth and mutual benefits, while keeping life everywhere through all of our activities. ourselves open to new partnerships. 4 Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide. Toyota’s Olympic Vision Toyota is proud to be part of The Olympic Partner programme (TOP) as a mobility sponsor for the Tokyo CSR policy: Contribution towards sustainable development 2020 Olympic and Paralympic Games. We believe that the Olympic Games personify our ambition to transform our reputation from ‘car maker’ to a company that makes a meaningful contribution to society through: Medium- Annual Toyota Toyota to long- directions: Regular Toyota • improved environmental responsibility that will Way Global term man- global business Code of Vision agement corporate activities see us lead the way in terms of hybrid technology, TOYOTA SOUTH AFRICA MOTORS 2001 Conduct plan policy vehicles with reduced CO2 emissions and meeting our 2050 Challenge (see page 10); • bringing mobility for all. We want to be recognised as a human movement company that brings personal mobility, autonomous driving and out-of-the-box TSAM and other TMC subsidiaries take initiative innovations; and to contribute to the harmonious and sustainable • improving transportation management, including our development of society and the earth through all business drive for connected cars, transportation apps and activities that we carry out in each country and region, better infrastructure. based on our Guiding Principles. We comply with local, SUSTAINABILITY REPORT 2018/19 national and international laws and regulations as well as Through our Olympic partnership we will awaken Ikigai the spirit thereof, and conduct our business operations (a reason for being, the thing that gets you up in the with honesty and integrity. In order to contribute to morning) through our ‘Start Your Impossible’ campaign. sustainable development, we believe that management This campaign is rooted in our belief that everyone has interacting with its stakeholders is of considerable an impossible, which we aim to unleash. In 2018 TSAM importance and we will endeavour to build and maintain implemented a Start Your Impossible campaign for sound relationships with our stakeholders through open employees to share inspirational stories or pledge to and fair communication. We expect our business partners start a new challenge by simply sharing on one of three to support this initiative and act in accordance with it. platforms, namely: internal mobility website (staff, dealers and suppliers), our closed Facebook page for staff, as well as a free SMS line. 5
I Toyota_Page 6_28 November 2019_Proof 9 introduction to TSAM is a key component of South Africa’s automotive manufacturing sector. We play a pivotal role in driving economic growth and creating employment. Established in 1961 by Dr Albert Wessels an TSAM Over 7 300 TOYOTA SOUTH AFRICA MOTORS 298 Dealers in South Africa and employees BLNS countries (including satellites) Botswana Key competitive advantages: Namibia Swaziland State-of-the-art assembly operations (eSwatini) SUSTAINABILITY REPORT 2018/19 We believe that a large part of our success is attributed to the way our value chain collaborates and engages to form an South Africa Lesotho 101 integrated ecosystem – from parts suppliers component manufacturers to manufacturing, sales, our dealer network and our valued customers or guests. Wholly owned by TMC 6
Toyota_Page 7_28 November 2019_Proof 9 Sandton, Johannesburg Head Office Marketing and Sales Boksburg, Johannesburg Warehouse Distribution of After-Sales parts Prospecton Plant, Manufacturing and Toyota Hilux, Fortuner, Ses’fikile, Corolla, Corolla Quest Durban assembly operations Hino Dyna, Hino 300, 500 and 700-series Imports We import an additional 22 models from our global Toyota affiliates. All Lexus models are imported from manufacturing plants in Japan. Exports We also export vehicles to 75 countries throughout Africa, Europe and Latin America. Dealer network Our vehicles are distributed regionally through our network of independently owned and run dealerships in South Africa, Botswana, Lesotho, Namibia and Swaziland (eSwatini). These include full dealerships and satellite services (that only offer parts and services). Our structure and business model Import duty Imported vehicles Vehicle cost Parts suppliers Manufacturing Sales business Dealer network Customers Parts volume Parts cost Production volume Market share EXPORTS TOYOTA SOUTH AFRICA MOTORS RETAIL POINTS IN Swaziland SOUTHERN AFRICA South Africa Botswana Namibia Lesotho (eSwatini) Total Toyota Full dealers 173 6 12 1 2 194 Automark satellite 3 3 Parts, Service and Automark satellite 3 3 Parts and Service satellite 3 1 1 1 6 SUSTAINABILITY REPORT 2018/19 182 7 13 2 2 206 Hino Full dealers 45 3 2 1 51 Parts and Service satellite 13 1 1 15 58 3 3 – 2 66 Lexus Full dealers 17 1 1 19 Parts and Service satellite 6 1 7 23 1 1 1 – 26 298 7
C Toyota_Page 8_28 November 2019_Proof 9 CHIEF EXECUTIVE OFFICER’S MESSAGE Andrew Kirby President and CEO Toyota South Africa Motors 2018 was a pleasing year in which we managed to remain resilient and grow our volumes and market share in a declining market. We navigated the headwinds in an operating environment that continued to be characterised by low consumer confidence TOYOTA SOUTH AFRICA MOTORS and business uncertainty. As a business, we remained robust and embedded vital strategic advancements which will also lay a good foundation for our business. These will enable us to navigate the continually changing landscape and evolve in the coming years. SUSTAINABILITY REPORT 2018/19 8
Toyota_Page 9_28 November 2019_Proof 9 Increasing volumes in a TSAM’s journey to The demand for new vehicles in the South African market has been declining market global competitiveness declining over the years. Our exports TSAM’s performance in 2018 reflects and exports into the rest of Africa have been the strength of our brand coupled with We restructured our business to growing marginally while our exports the diligent efforts of our dealer network enhance our efficiencies and, therefore, into Europe have remained stable. Sub- as well as the results of the ReBorn move towards a higher level of global Saharan Africa is a key market which strategy that was launched in 2016. competitiveness in the TMC network. has substantial growth potential for us The strategy has evolved our approach Internal initiatives such as the Big 5 to tap into in the coming years. to guest-centricity and helped us to competitiveness project, a benchmark deliver improved vehicles that meet against Thailand, and our efforts to Countries in the rest of Africa have the demands of our evolving customer rightsize the business have placed us identified the automotive sector as profile. We have instilled the ‘Best in in a good position to progress towards a catalyst which could propel their Town’ culture and mindset to assist our our October 2021 roadmap. industrialisation roadmaps and assist dealers in delivering unrivalled guest them to decrease their balance of experiences at every touchpoint. TSAM is also cognisant of further payment challenges. Numerous initiatives which will need to be enablers, such as the African In 2018, we increased our implemented to remain competitive Continental Free Trade Area (AfCFTA), concentration on fleet sales and toward 2026, when the replacement have been deployed to facilitate this servicing the demand for quality and of our IMV (Hilux and Fortuner) is development. TSAM and TTC are reliable used cars through Automark. expected. collaborating with certain governments This focus yielded good results and with the potential semi-knocked-down played a key role in increasing our Big 5 kit (SKD) hubs in Africa (Ghana and 1 volumes in the declining market. Kenya) to support local manufacturing. Manufacturing conversion This initiative is in line with TSAM’s Our role in the taxi industry has been a cost reduction long-term vision of becoming TMC’s key part of our contribution to affording 2 mother plant for the continent. mobility to South African communities. We continued to satisfy the demand for Fixed cost reduction The production of the Corolla sedan the Ses’fikile in the taxi industry and the model at our Durban plant will cease 3 demand continues to increase. in December 2019. TSAM will start Component/parts cost reduction importing the new-generation Corolla and will continue producing the current TOYOTA SOUTH AFRICA MOTORS 4 model as the Corolla Quest. We are Logistics cost in the process of seeking approval reduction to produce a new passenger model. 5 The approval process has been Increase domestic and challenging due to the constrained export sales South African market and the lack of a volume-generating market in Africa. SUSTAINABILITY REPORT 2018/19 9
Toyota_Page 10_28 November 2019_Proof 9 CHIEF EXECUTIVE OFFICER’S MESSAGE (continued) Transforming the TSAM along with six other original showcase opportunities and also equipment manufacturers (OEMs) will promote Tier-2 supplier capability South African be involved in the establishment of and growth. For South Africa to automotive sector a R6 billion automotive industry fund expand localisation it is mandatory TSAM believes it is essential to increase (AITF) through the National Association to develop and expand our Tier-2 the local content in South African of Automobile Manufacturers of supplier base. As TSAM, we believe vehicles. South Africa (NAAMSA). The AITF gives that this is where we will start to see us the opportunity to develop more a real competitive advantage and Currently, the volatile exchange rate Tier 2 and 3 suppliers and to support enable growth with sustainability for influences the cost of importing black ownership of vehicle dealerships. the future. vehicles and components as well This will also enable us to achieve the level 4 B-BBEE certification that • In 2018 Toyota became the proud as our profit margins on exports. is required for the second phase of partner of the South African Sports Furthermore, import duties, ad valorem the APDP. Association for the Physically tax, VAT and the CO2 tax cumulatively Disabled (SASAPD) – a sports account for 42% of the retail price of vehicles in South Africa. Some of our successes federation that develops and promotes the sporting codes Toyota Dundee reopened as a satellite offered at Paralympic level for In 2018 the Department of Trade dealer (part of the Mortimer and athletes with physical disabilities and Industry introduced an Thesele Group) in April 2018 and and visual impairment. Furthermore Automotive Masterplan which outlines was later approved as a full dealer in we inducted Start Your Impossible government’s objective to increase February 2019, with a 51% B-BBEE challengers to continue driving our local content in South African-made shareholding by the Thesele Group. Start Your Impossible ventures and vehicles. The master plan will come into Toyota Hyde Park opened in May of help drive the momentum internally effect from 2021 and run till 2035. It will 2018 and Toyota Citrusdal upgraded in their respective areas. build on the progress that has been to a full dealer on 1 January 2019. achieved by the current Automotive The Taxi Centre in Kuilsrivier, which forms part of Prieska and Ulundi Our commitment Production and Development satellite dealers, was approved as a to environmental Programme (APDP) which expires in full dealer. stewardship and December 2020. corporate citizenship Engaging with our Toyota envisions a society where Automotive sector stakeholders people, cars and nature can coexist Current Vision of the Master Plan • The external affairs department has in harmony. At TSAM we are working TOYOTA SOUTH AFRICA MOTORS played a huge role in improving our on numerous initiatives through Future • Employs • Employs engagement with key stakeholders, Toyota and other internal teams to 110 000 220 000 particularly with the government and achieve this vision. • Contributes • Increase the regulators. TSAM, other OEMs and 7% to GDP proportion of the Competition Commission are still TSAM is committed to TMC’s ambitious • 30% of local content in vehicles working to reach a solution which is goal to reduce vehicle CO2 emissions South Africa’s assembled in mutually beneficial to everyone on by 90% (based on 2010 levels) by total South Africa the right-to-repair (R2R) campaign. 2050. To sufficiently equip our leaders manufacturing output from 38.7% Our view is that this movement on environmental challenges we to 60% threatens the profitability of franchised facilitated a four-hour training course • 14% of total exports dealerships and, most importantly, in collaboration with the University of SUSTAINABILITY REPORT 2018/19 the safety of our vehicles. Stellenbosch. We are currently working TSAM is committed to transformation towards the 2030 milestones (for more • TSAM is an active supporter efforts aimed at our dealer network, information view page 57). Alongside of the National Association of supplier base and senior leadership. the rest of TMC’s global affiliates, Automotive Component and Allied To support the transformation of Manufacturers (NAACAM) Supplier we are committed to having a zero our staff and to provide a pipeline of show. The show promotes the environmental impact and achieving a senior leaders we have revitalised South African Automotive Master net positive impact. TSAM is cognisant our graduate programme and we are Plan (SAAM)’s pillars of localisation of the need to address the transport focusing on improving our retention of and supply chain transformation. sector’s greenhouse gas (GHG) African critically skilled employees. It also allows us, as OEMs, to emissions in South Africa. 10
Toyota_Page 11_28 November 2019_Proof 9 Disappointingly, the uptake of EVs and HVs in the South African market has been Acknowledgements low. This dynamic is due to infrastructure challenges and the lack of national My gratitude goes to the TSA board incentives to support sales. TSAM has several initiatives aimed at the public to educate and raise awareness around fuel consumption and other environmental and our management teams for their benefits that accrue from using eco-friendlier vehicles. diligent support and contribution to our strong performance in 2018. The wise TSAM actively contributes towards social upliftment and environmental initiatives. counsel of the global Toyota Tsusho Protecting our wildlife heritage is close to our heart. In particular, the plight of rhinos, Corporation (TTC) leadership has been as well as other endangered species, is a matter that requires our attention – hence instrumental in our transition to a new our commitment to supporting SANParks. organisational structure. Our employees are the backbone of Outlook our company, I am grateful for their unfailing support in ensuring that we I am pleased that we made some very important strategic steps to position our continue to deliver reliable vehicles and business for the future. Although the automotive market has been subdued, sustainable value to the society. we are committed to make the most of the prospects in the vehicle and non-vehicle products space, which we believe we are well positioned for. Our priority is to ensure that TSAM remains a dynamic and agile company – as such we are considering the introduction of a millennial board to ensure the continued progression of our ReBorn strategy. TSAM’s progression will also be supported by the new leadership behaviours which we launched in 2018: Andrew Kirby President and CEO Self-regulate Toyota South Africa Motors Empower others to correct you Speak last and let others present Insist that the project leader leads Add voices – facilitate all contributions Our guest-centric approach will continue to be the source of our competitive advantage and retention strategy. We will continue our emphasis on the ‘Voice of the Guest’ and respond to their needs at every touchpoint. TSAM’s dealers TOYOTA SOUTH AFRICA MOTORS will continue driving the ‘Best in Town’ philosophy and the ‘Keep It Genuine’ campaign which is crucial to the safety and integrity of our vehicles. We are looking forward to the revamped e-Toyota platform and the added benefits it will yield. Globally, Toyota is working towards becoming a mobility services provider as opposed to merely being a provider of vehicles. We are in the process of developing financing models to generate new revenue streams. The outlook for the automotive sector, especially the premium segment will remain challenging and volatile in 2019. Continuing to deliver affordable and quality vehicles SUSTAINABILITY REPORT 2018/19 to as many customers as possible will preserve our sales record. We are committed to demonstrating that we are globally competitive and capable of achieving the required volumes to make the production of a new model at our Prospecton facility viable. By successfully implementing the Global Toyota Parts Supply System (GTOPAS), TSAM will continue with its drive to become the hub for parts in Africa. Following the three-year wage agreement, which was signed in 2016, the National Union of Metalworkers of South Africa (NUMSA) will begin negotiations with OEMs in 2019. We aim to amicably reach a mutually viable agreement with them. 11
12 SUSTAINABILITY REPORT 2018/19 TOYOTA SOUTH AFRICA MOTORS our Toyota_Page 12_28 November 2019_Proof 9 BRANDS B
Toyota_Page 13_28 November 2019_Proof 9 Our three brands – Toyota, Lexus and Hino – serve to meet the needs of a broad spectrum of customers, from entry-level passenger cars to large commercial vehicles. Through Automark we also offer customers reliable used cars. We treat our customers as guests from the moment they enter a dealership right through to our after-sales service and we maintain our strong reputation for quality, safety and reliability through our Toyota Way which emphasises Kaizen – continuous improvement and respect for people. 2019 2018 2018 2017 2016 SA SALES VOLUMES target target actual actual actual CBU 42 481 39 873 39 196 38 588 41 479 CKD 85 636 81 620 82 822 79 952 70 316 Hino/Dyna 4 510 3 850 3 774 3 373 3 913 Total 132 627 125 343 125 792 121 913 115 708 Export volumes 43 249 41 664 46 307 53 322 45 043 Total sales 175 876 167 007 172 099 175 235 160 751 Total production 130 970 125 006 135 100 138 722 118 674 2019 2018 2018 2017 2016 TSAM MARKET SHARE (%) target target actual actual actual Total domestic: Toyota, Lexus and Hino 24.2 23.8 24.2 22.9 21.40 Passenger cars: Toyota and Lexus 19.1 19.2 19.2 18.7 16.40 TOYOTA SOUTH AFRICA MOTORS Light commercial vehicles: Toyota 32.2 29.5 32.2 29.4 29.40 Medium commercial vehicles: Hino 23.0 22.2 21.6 21.3 25.26 Heavy commercial vehicles: Hino 8.8 9.6 7.6 7.4 7.25 TOTAL MARKET SALES SUSTAINABILITY REPORT 2018/19 TOYOTA 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 13
Toyota_Page 14_28 November 2019_Proof 9 OUR BRANDS (continued) TOYOTA Toyota has been a well-loved, reliable and trusted brand in We move the public The Ses’fikile holds a strong reputation South Africa since 1961. Our vehicles are an integral feature of for offering a safe and reliable mode of the country’s social and business culture. We offer a vehicle for public transport. Ses’fikile contributes 13.27% to Toyota’s overall market every requirement and taste. share and is the second best-selling model after the Innovative International Multi-purpose Vehicle, or IMV (Hilux Toyota reaffirmed its status as a brand We are strongly committed to and Fortuner). TSAM has been holding of choice during 2018. We maintained ‘doing the right things’ consistently. well above 90% market share with the our market-leading position in the sales TSAM aims to make the necessary Ses’fikile. In 2018 we introduced a taxi market and increased our market share refinements to our vehicle models centre – Barloworld Toyota, Kuilsrivier to 24.2% (2017: 22.9%). The Hilux, based on the ‘Voice of the Guest’ and a 60 000km service plan. We also which has been South Africa’s best- to ensure that we improve our assessed the prospect of introducing a selling vehicle for more than 40 years, customer experience and remain the Coaster minibus (17 – 35 seater). sold 40 018 units. ‘Best in Town’. Going off-road Dealers drive our success A car for every person TSAM’s participation in the Dakar Rally The contribution of our dealer TSAM’s ReBorn strategy has focused is an important business tool. The race channel is a remarkable factor which on winning the hearts of first- provides a platform for us to showcase contributes to our success. We are time vehicle owners and younger the durability of our vehicles and the appreciative of their continued efforts, consumers as well as millennials/ “bold soul” of our local talent. In 2018 but we cannot become complacent Afrilennials. We are revamping our Toyota Gazoo Racing SA won the race because there is always room for approach to purchasing, marketing which took place in Peru. The victory improvement. We will continue our and product features accordingly came after achieving six podium places drive to uphold our position as the to meet the needs of our changing since the Toyota Hilux’s debut in 2012. TOYOTA SOUTH AFRICA MOTORS brand of choice. demographics. Our proudly South African Hilux V8 has become the Dakar vehicle of choice for We value and prioritise the safety of the both local and international competitors. people who drive our cars. Our internal safety specifications exceed national TSAM also supports the Fortuner 4x4 legislative requirements and we ensure Challenge. The competition, which has that all our vehicles meet or exceed been running for three years, enables these safety specifications. four public participants to team up with celebrities and compete in a range of tasks. The winning participant receives a brand-new Fortuner. SUSTAINABILITY REPORT 2018/19 2019 2018 2018 2017 2016 TOYOTA SALES (UNITS) target target actual actual actual Production volume 130 363 118 998 126 463 131 068 116 042 Domestic sales 133 000 130 000 130 401 124 441 114 019 Light commercial vehicle sales 61 390 58 855 60 231 54 952 36 609 Exports 56 900 43 249 52 528 43 776 53 322 14
Toyota_Page 15_28 November 2019_Proof 9 New Toyota product launches in 2018 2 0 1 8 / 1 9 A W A R D S April 2018 • Etios Limited Edition model May 2018 • Hilux Dakar Limited Edition Gold 2018 June 2018 • Corolla Special Edition National Automobile July 2018 • New introduction Rush model Dealers’ Association (NADA) • Aygo (minor change) Dealer Satisfaction Index (DSI) awards • Prius (specification change) • 86 (specification change) Orchid for Rush Campaign – Jul 2018 • Prado (specification change) Orchid for Corolla Beaded Billboard – Sep 2018 • C-HR (specification change) Orchid for Corolla Hatch Campaign – Feb 2019 August 2018 IMV (Hilux, Fortuner) (Mini-minor change) Sports Industry Awards 2018 – Fortuner 4x4 October 2018 Quest (specification change) Challenge wins Social Media Campaign of February 2019 • New Generation Corolla Hatch the Year – Aug 2018 • Corolla Special Edition Adfocus Partnership of the • Yaris (specification change) Year – Toyota & FCB – March 2019 • Prius (minor change) Nov 2018 • New Generation RAV4 • Ses’fikile (specification change) Toyota’s 5 Continents Drive Project a great success in Africa Toyota has just completed its fifth experiencing first-hand the way vehicle The start-point for Team 2 in Namibia consecutive leg of the 5 Continents performance is impacted by the wide treated the crew to some of the world’s Drive (5CD) Project in Africa. The Africa variety of driving conditions around the most dramatic landscapes, including leg comprised two routes: Arusha, world and to gather new insights”. sweeping deserts and glittering Tanzania to Sandton, South Africa as salt pans. Namibia also lays claim well as Windhoek, Namibia to Durban, “We were able to get valuable hands-on to the world’s highest sand dune South Africa. The first drive, led by experience on different types of roads (the notorious Dune 7) and is one of Team 1 Captain Bundo covered more in Africa, receive valuable comments the world’s most sparsely populated than 4 000km including countries such from our customers, and have close countries. as Tanzania, Zambia, Zimbabwe and communications between Japanese TOYOTA SOUTH AFRICA MOTORS Botswana. and African colleagues in one team.” “We trust that the experience was both adventurous and rewarding. The Team 2 drive, under Captain Before coming to Africa, the 5CD team But we know that the most important Umeda, covered Namibia, Lesotho faced unrelenting dust and heat in the benefit will come from the valuable and South Africa. The teams also Australian leg in 2014, freezing cold information you gathered from our included members from TSAM and torturous passes in the Americas roads, which we know will be used and representatives from other to help us make ever-better cars and in 2015 and 2016, and the urban African countries such as Tanzania, thus heed President Akio Toyoda’s highways of Europe in 2017. Zambia, Zimbabwe, Congo and Côte call to put our vehicles to the ultimate d’Ivoire. The teams covered more Africa presented the team with a totally test, across every possible terrain and than 10 000km from the two drives. new and varied set of challenges. Team climate on every continent worldwide,” The project also included spot drives adds Kirby. 1 had to contend with unforgiving in other countries such as Kenya, SUSTAINABILITY REPORT 2018/19 terrain, high altitude in some parts, as Morocco, Togo, Benin, Cameroon Team 2 of the 5CD was treated to well as sharing some of the worst roads a warm African welcome with song and Senegal. in the world with some of our beautiful and dance upon arrival at the TSAM In the words of President and CEO wildlife. In Tanzania the team got to Prospecton Plant in Durban. This event of TSAM, Andrew Kirby, the main experience extreme dirt-road driving also marked the end of the Africa leg purpose of 5CD is to “enable Toyota on their way to the Ngorongoro District. before the project moves to the next technicians, engineers and a varied They came to understand that durability continent. Toyota believes that the crew of white-collar as well as other has to be one of the most important data collected will be crucial towards partners to get out from behind their aspects when building vehicles for making ever-better cars – not only for work desks and actually feel the road, African conditions. Africa, but for all Toyota markets. 15
Toyota_Page 16_28 November 2019_Proof 9 OUR BRANDS (continued) LEXUS Lexus offers exceptional customer experiences. We deliver vehicles with an inspired design philosophy, relentless innovation and uninhibited performance which becomes a passionate, moving experience. The challenging economic environment Our customer loyalty and retention Beyond the challenges presented continued to negatively impact the has been very strong and will be a by the poor economic environment, premium car market during 2018. catalyst for the brand’s sustainability in the premium brands market segment Lexus’ sales decreased to 864 units the future. Our dealer network and our has become heavily incentivised. (2017: 885). Despite the subdued employees played an instrumental role The relevance of the premium market, Lexus maintained a market in maintaining our market share and market has also been challenged by share of 1.7% (2017: 1.5%) and we remaining resilient in this challenging mainstream brands, which are also remain in a much better position period. Therefore, it is essential to offering vehicles of a similar quality and compared to other premium brands. ensure that we retain our employees. specification level at much lower prices. Lexus is on a continued pursuit of We introduced a new-generation ES Omotenashi (Japanese for and a new model (UX) during the last ‘hospitality’). Our guest-centric quarter of 2018. The UX is Lexus’ approach is premised on an 2 0 1 8 first model in the small SUV market, approach of personalisation, A W A R D S which is growing in popularity. attention to detail and delivering Our range also comprises clean/ exceptional service. Upon alternative energy vehicles. Although purchasing a Lexus vehicle, each ES awarded the popularity of these vehicles is still TOYOTA SOUTH AFRICA MOTORS guest receives a personalised Premium Sedan of low, we are in a strong position to gift. Lexus includes the input the year by Autotrader capitalise on their growing demand, of psychologists to understand SA Guild of Motoring Journalists which will be driven by related customer satisfaction and Car of the year legislation in the coming years. enhance the brand’s customer experience. Gold Award in Customer Service Experience as rated by Ipsos – only two premium brands achieved Gold status, i.e. Lexus and Audi Silver Award NADA SUSTAINABILITY REPORT 2018/19 2019 2018 2018 2017 2016 LEXUS SALES (UNITS) target target actual actual actual Production volume 1 000 874 897 942 1 111 Domestic sales 1 100 1 000 864 885 1 031 16
Toyota_Page 17_28 November 2019_Proof 9 SUSTAINABILITY REPORT 2018/19 17 TOYOTA SOUTH AFRICA MOTORS
Toyota_Page 18_28 November 2019_Proof 9 OUR BRANDS (continued) HINO Hino is a committed provider of products and support We also aim to continue growing by meeting our customers’ requirements. services to professional truck users and freight operators in There is a growing shift in demand the South African transport and logistics industry and broader from automated manual transmissions (AMT) and manual gearboxes to market. Our Total Support philosophy is ‘Keep On Trucking’. automatic transmissions in the Hino 300 and 500 ranges. In 2018 Hino worked on the Hino South Africa (Hino SA) is an house will play an integral role in driving development of Hino Connect. integral part of TSAM. We strive to our sales in the future. The telematics system will be released enhance our marketing capabilities and in 2020 and fitted into all Hino models. Through our 66 dealerships, Hino’s It is also customisable to suit specific maximise our sales volumes. Despite footprint in Southern Africa is customer requirements. Hino Connect operating in a currently stagnant truck the largest among truck brands. will be fundamental for our buy-back market, Hino performed remarkably Our production plant in Durban programme. The system will enable our well in 2018. Our sales and production produces 40 different derivatives of dealer network to monitor the usage of volumes increased significantly Toyota Dyna, Hino 300, Hino 500 and vehicles to ensure that they can be sold compared to 2017. We sold Hino 700 models, which cover the as reliable used trucks. 4 408 units (2017: 3 747) vehicles and entire spectrum of commercial vehicle achieved a production volume of 4 489 needs. We also offer a full range of (2017: 3 407). Our total sales figure buses from 25- to 65-seaters. equates to 11.6% of the South African truck market. Our Total Support philosophy enables us to go the distance for our This performance was largely driven customers by delivering appropriate, by the Dyna sales, which are now durable and reliable trucks as well as TOYOTA SOUTH AFRICA MOTORS included in the light commercial vehicle comprehensive after-sales services/ segment. Our light commercial vehicle support and value-added services such sales increased by 43.7%, while Hino’s as the Hino Care programme. Building heavy commercial vehicle sales, which and maintaining trusted relationships included the new Hino 500 Wide between Hino Motors Limited, Hino SA, Cab models, increased by 23.5%. our dealer network and suppliers is The establishment of Hino Financial a priority. Services as an accredited finance SUSTAINABILITY REPORT 2018/19 2019 2018 2018 2017 2016 TOYOTA SALES (UNITS) target target actual actual actual Production volume 5 447 4 387 4 489 3 407 3 772 Domestic sales 4 950 4 400 4 408 3 747 3 572 Light commercial vehicle sales (Dyna) 1 500 1 000 1 179 820 93 Medium commercial vehicle sales 1 790 1 710 1 734 1 717 2 112 Heavy commercial vehicle sales 1 660 1 690 1 495 1 210 1 367 18
Toyota_Page 19_28 November 2019_Proof 9 We also worked on upgrading but also make a meaningful Customer retention is a key component the e-Hino system to improve contribution to the community. of our sustainability approach. communication between Hino SA Hino Shelly Beach was awarded the Our ‘Bring it Back’ campaign aims and its dealer network. The system title of Hino Dealer of the Year for 2018 to encourage vehicle owners to enables our dealer network to view an while Subbeshin Pillay was presented bring trucks in for servicing at our integrated vehicle history from ordering, with the Hino Knight of the Year award. dealerships. We have a two-year through to production, sales and after- warranty on parts and an extended sales servicing. The system supports Training is a vital component of five-year vehicle warranty. Fleet owners standardisation of dealer and customer meeting the challenges of trucking have already started yielding great communication as well as quality in the future. The Hino Learnership benefits from ‘Keeping Your Hino management throughout the vehicle’s Programme (HLP) aims to provide a Genuine’. life span. pipeline of young sales executives for our Hino dealer network. Through the Internationally Hino will maintain its There has been growing demand nine-month programme learners will focus on customer retention, product for Hino trucks in the export market. be able to tailor a requisite truck and line-up improvements, strengthening We are targeting to continue servicing finance package in accordance with our dealer network and staff the growing demand in Zimbabwe, the customer’s needs. In 2018 we development. We are committed to Zambia, Mozambique and Malawi. introduced an accredited Supply Chain delivering a lower cost of ownership The Southern African Customs Union Management course that employees and higher levels of customer (Botswana, Lesotho, Swaziland from Hino SA and its dealers satisfaction. Hino has recognised (eSwatini) and Namibia (BLSN embarked on. the growth potential of the extra- countries)) has also shown great heavy commercial segment. We aim potential, most notably in Namibia. to develop a dedicated department For Hino SA to continue servicing this to ensure that we increase our growth in demand we may be required market share. to expand our production plant. 2 0 1 8 A W A R D Hino aims to move towards vehicles TOYOTA SOUTH AFRICA MOTORS We maintained our strong relationship which rely on four alternative fuel with the farming community by sources: diesel-electric hybrids, plug- delivering water donated by TSA to in hybrids, pure electric power and Beaufort West during the drought hydrogen fuel cells by 2025. period. We recognise Hino Knights, an elite group within the dealer sales force Gold 2018 National who are not only excellent salespeople Automobile Dealers’ Association (NADA) Dealer Satisfaction Index (DSI) awards SUSTAINABILITY REPORT 2018/19 19
Toyota_Page 20_28 November 2019_Proof 9 OUR BRANDS (continued) AUTOMARK Since its inception in 1982 Automark has strived to provide quality certified used vehicles. We thus provide customers with peace of mind when purchasing a used car. Automark’s world-class focus on customer experience, vehicle quality and safety remains aligned to the Toyota Way. The demand for used vehicles has In conjunction with TTC we have made models are also eligible for the Toyota grown in recent years. According to efforts to assess the prospects of Genuine extended warranty. This is TransUnion, the ratio indicates that driving the Automark brand into the part of our ReBorn strategy, which finance houses are financing 2.03 rest of Africa. aims to strengthen customer retention. new vehicles for every used vehicle. We strive to reward customer loyalty Our aim is to achieve a 1:1 ratio We guarantee that all Automark at a time of vehicle replacement by between new vehicle sales and private vehicles have gone through a range establishing a used car service that customer used vehicle sales. We have of tests to ensure the quality is provides ultimate customer experience competed well in a highly saturated maintained. The Automark Promise and offers the best trade-in value. environment, which has replaced direct also certifies that the vehicle is backed customer engagement with online sales by Toyota. Our policy on all vehicles and trade-in opportunities. In 2018 includes a seven-day return clause if Automark increased its sales volumes the customer experiences a serious to 50 399 (2017: 46 545). problem with the vehicle. All Toyota TOYOTA SOUTH AFRICA MOTORS 1 High High customer Continuous Car kept in customer service satisfaction genuine service good condition in after service Reason for used car as a customer retention tool 2 Good price Ultimate Best trade-in Repurchase offer for customer price Toyota trade-in experience SUSTAINABILITY REPORT 2018/19 2019 2018 2018 2017 2016 TOYOTA SALES (UNITS) target target actual actual actual Automark used vehicle sales 52 000 50 000 50 399 46 545 45 083 New vehicle domestic sales 133 000 123 800 130 401 124 441 114 019 20
Toyota_Page 21_28 November 2019_Proof 9 TOYOTA FINANCIAL SERVICES Toyota Financial Services (TFS) is a key pillar of the TSAM ecosystem. We are a captive finance company with the sole purpose of supporting and improving sales of Toyota, Lexus and Hino vehicles. By offering finance to qualifying applicants we play a significant role in supporting the dealer network, retail customers and TSAM to achieve their goals. In 2018 we managed to maintain balanced with responsible credit TFS aims to continually develop our presence as a financial institution lending practices. It is our intention to products and solutions which despite the challenging macroeconomic always conduct our business ethically support TSAM’s brands. As the environment. TFS financed 45 437 and in a legally compliant manner, business continues to transform into vehicles at a conversion rate of 58.16%. acting to the best of our abilities for a mobility company, we are intent Fewer people qualify for finance and the greater good of our business and on evolving our offering too. the volume of finance transactions we our stakeholders. In conjunction with are concluding has decreased due the BankSeta we upskill our teams to the increasing levels of household and the dealer network through an indebtedness linked to the slowdown in accredited training programme, which OM OF MO VEM E is designed by TFS and facilitated EED NT the economy. FR TIO N PL AT F through TALA, TSAM’s corporate SAC OR TFS operates in a highly regulated training division. TFS is committed AN M TR R ev o lutio ni se environment and we apply sound to driving transformation. We run | n tr a corporate governance principles. a learnership which specifically ai di ch ti o The benefits of the rapidly evolving aims to develop the skills of lue na financial services solutions must be people with disabilities. E xpand va l bu TOYOTA SOUTH AFRICA MOTORS sin e ss TRADITIONAL BUSINESS Fleet Digital Mobility SUSTAINABILITY REPORT 2018/19 21
M Toyota_Page 22_28 November 2019_Proof 9 our MATERIAL MATTERS TOYOTA SOUTH AFRICA MOTORS SUSTAINABILITY REPORT 2018/19 22
Toyota_Page 23_28 November 2019_Proof 9 Our material matters are predominantly aligned to TMC’s global approach to sustainability. To ensure that they remain relevant in the South African context TSAM also reviews and refines the material matters regularly. Our senior management revisits the matters annually. Additionally, we periodically conduct reviews of key documentation, detailed assessments based on surveys as well as one-on-one discussions with key internal and external stakeholders. Our material matters are segmented according to our sustainable business model’s three non-financial drivers: society, environment and governance. 1 SOCIETY Collaboration with Material theme Material issue Social contribution Customer and quality first business partners Employees activities • Ensuring customer • Suppliers • Performance • Community support satisfaction • Dealers management • Employee involvement • Service excellence • Enterprise development • Training and development • Initiatives for improving • Resolving issues • Government • Diversity and inclusion traffic safety • Ensuring quality • Unions • Safety • Creating an enriched • Health and well-being society • Respect for human rights 2 TOYOTA SOUTH AFRICA MOTORS ENVIRONMENT Emissions reduction Resource efficiency Society in harmony with nature • Challenge 1: new vehicle zero CO2 • Challenge 4: minimising and • Challenge 6: establishing a future emissions challenge optimising water usage society in harmony with nature • Challenge 2: life cycle zero CO2 • Challenge 5: establishing a emissions challenge recycling-based society and • Challenge 3: plant zero CO2 systems emissions challenge SUSTAINABILITY REPORT 2018/19 3 Governance GOVERNANCE Ethics Risk management • Approach and structures • Ethics • Risk management • Compliance 23
S Toyota_Page 24_28 November 2019_Proof 9 society TSAM’s business activities are designed to deliver sustainable growth in society. We are guided by values such as ‘safety and peace of mind’, ‘environmental sustainability’ and ‘Waku-doki’ (excitement and exhilaration that wows you). TOYOTA SOUTH AFRICA MOTORS Material theme Material issue Material issues Collaboration with Social contribution Customer and quality first business partners Employees activities • Ensuring customer • Suppliers • Performance management • Community support SUSTAINABILITY REPORT 2018/19 satisfaction • Dealers • Training and development • Employee involvement • Service excellence • Enterprise development • Diversity and inclusion • Initiatives for improving • Resolving issues • Safety traffic safety • Ensuring quality • Health and well-being • Creating an enriched society • Respect for human rights 26 32 40 50 24
Toyota_Page 25_28 November 2019_Proof 9 The TMC Corporate The TSAM approach Social Responsibility (CSR) policy TSAM’s approach to sustainable development Since its foundation TMC has continuously striven to contribute is aligned to TMC’s CSR policy and Guiding to the sustainable development of society by manufacturing Principles. We realise that we can play a positive role and providing innovative and quality products and services. in the societies and environment in which we operate Motor vehicles greatly expand the freedom of mobility, but through contributing to economic and social development impact society and the environment. As such TMC and its and working in harmony with nature. We engage our subsidiaries take ownership and initiative to contribute to stakeholders to build trust, meet and exceed expectations the harmonious and sustainable development of society and and find innovative, collaborative solutions to address the earth through all our local, regional and global business key sustainability risks and opportunities. Our team is activities, based on our Guiding Principles. These principles committed to creating sustainable mobility for all – express our engagement with stakeholders such as customers, in a safe and responsible manner. employees, our business partners (suppliers and dealers), our shareholders and global society/local communities. We strive to comply with local, national and international laws and regulations as well as the spirit thereof and we conduct our business operations with honesty and integrity. In order to contribute to sustainable development, we believe that management interacting with its stakeholders is of considerable importance, and we will endeavour to build and maintain sound relationships with our stakeholders through open and fair communication. We expect our business partners to support this initiative and act in accordance with it. TOYOTA SOUTH AFRICA MOTORS SUSTAINABILITY REPORT 2018/19 Challenge 2050 25
C Toyota_Page 26_28 November 2019_Proof 9 CUSTOMER and quality first Toyota adheres to the principles of putting the ‘guest first’ and ‘quality first’ in everything we do. By listening and responding to the ‘Voice of the Guest’, we have a mechanism which enables us to attract and retain customers. Toyota’s guest-centric approach places effort on ensuring service excellence and quality as well as effectively resolving issues where they arise. With our commitment to Kaizen, continuous improvement is driven from our manufacturing plant through to customer engagement. TSAM constantly re-evaluates and revitalises HIGHLIGHTS its approach to customer service through continuous improvement. Our ReBorn • Promotion of the ‘Voice of the strategy ensures that we continuously improve our guest relations as well as the Guest’ and a +Alpha experience quality, safety and affordability of our vehicles. to attract guests and drive retention • Enhancement of the MyToyota app to incorporate more user- friendly features and enhanced functionality TOYOTA SOUTH AFRICA MOTORS CHALLENGES • Adapting to the speed of change • Tracing vehicle owners as part of the Takata airbag recall campaign SUSTAINABILITY REPORT 2018/19 26
Toyota_Page 27_28 November 2019_Proof 9 Ensuring customer delivering what guests require. engagement. Toyota’s view on guest We specifically recruit employees retention is not only focused on repeat satisfaction with the right attitude and an business — our intention is to cultivate The sustainability of TSAM is aptitude for hospitality. The Toyota love for the brand. intrinsically linked to our ability to retain Touch programme develops Toyota and expand our valued customer base. The MyToyota application enables ambassadors who live the Toyota Therefore, our key priority is to maintain owners to manage and monitor various values. In 2018 we held 58 sessions high levels of guest satisfaction which aspects of their vehicle ownership for 3 568 employees and dealer staff cultivates loyalty. digitally. through the programme. TSAM also Guest-centricity is a key component collaborates with the TMC global In 2018 we listened to the ‘Voice of the of our value proposition. Listening to network to establish and adopt Guest’ and made our vehicles more the ‘Voice of the Guest’ is a crucial best practices. attractive by increasing our focus on component which ensures that we accessories. Through interdepartmental We aim to meet the ever-evolving deliver a positive experience. This needs of our guests. To stay relevant collaborations with the vehicle planning philosophy underpins our approach in a changing world, we have a team, we have introduced more to guest experience and ensures that ‘Future Toyota’ team which focuses attractive accessories to our various we listen, and we are responsive to on building, identifying and driving models which are relevant to the our guests’ expectations. It is built on projects which focus on transforming lifestyle requirements of our guests. the principles of convenience, fairness our digital support capabilities and The introduction of Toyota-certified and transparency, convenience, guest-centricity. The ‘Voice of the accessories at our dealer network has personalisation and collaboration. Guest’ enables us to identify, develop made us a one-stop shop for authentic Successfully delivering this experience and implement many new processes, parts and accessories. This also requires an engaged staff complement, systems and technologies which contributes to our ‘Keep It Genuine’ committed to understanding and enhance our customer experience and campaign. TOYOTA SOUTH AFRICA MOTORS | B EST IN T OW AY N W TA | YO TO TO Guest- YO THE TA T centricity O | UCH MO ISI O N Accuracy + Caring RV D = Trust SUSTAINABILITY REPORT 2018/19 OU EL 27
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