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It’s not every day that the managing director of a leading global brand escorts you from reception to his office.
That in itself is an indication of the hands-on and less guarded leadership style of Casper Kruger, managing director of Ford Motor Company Sub-Saharan Africa (FMCSA).
The blue oval belonging to the US-based car manufacturer is one of the most recognised logos in the world.
But it’s rare for Ford to look to non-Americans to lead regional businesses.
So a local being appointed to head up the brand’s South African and sub-Saharan business operations is something of a coup.
Kruger, an academic turned motor industry specialist, was lured from his position as a vice-president at Toyota South Africa to take over from Jeff Nemeth in April 2017.
At the time, Ford was still reeling from the Kuga engine fire crisis and a recall affecting 4 557 cars.
“The opportunity to run the third-largest car manufacturer in the country was too big to say no to.
“It was a fantastic and unique opportunity. Opportunities like that don’t come around every day,” Kruger explains.
The Kuga disaster hurt Ford’s market share, with Kuga sales dropping from around 300 a month to about 100.
Ford’s total market share fell from 13.2% in 2016 to 12.8% in 2017, with the popularity of the Ford Ranger helping to soften the blow.
The Ranger was the second-best-selling vehicle in the country in 2017 behind the Toyota Hilux.
It also outsold the Volkswagen Polo Vivo, the top-selling passenger car.
Kruger says the company will continually work on rebuilding trust in the brand “so that the customer is comfortable that Ford has addressed the issues with the Kuga”.
He is also more focused on FMCSA’s relationship with its dealers, and in turn the dealers’ relationship with the customers in order to improve service levels.
“It is about the experience in their town or area that is so important, so our focus will be on ensuring that the best service is provided to the customer,” Kruger says.
“We have to rely on our global team to produce the best possible cars. […] When things go wrong, we need to react and make sure that we have the necessary resources in place and provide a continuous service.”
Market outlook
The Kuga recall aftermath was not the only issue facing Kruger. The automotive industry was under pressure from declining new car sales, increasing used car sales and changing mobility trends.
But, says Kruger, the industry is encouraged that overall sales for 2017 reflected growth, albeit marginal, for the first time in four years.
“The strengthening in exchange rates and a seemingly more positive economic outlook bode well for the year ahead, and at this stage we predict a slight improvement in sales for 2018,” he maintains.
A significant uptick in the sales of used cars in recent years has also dented the sales of new vehicles. But Kruger offers a constructive viewpoint.
“Used cars are an entry-ticket to the new car market. It’s an important affordability platform and feeder to the new car market.”
Changing trends
As part of its global electrification commitment, Ford has invested $4.5bn in electric vehicles (EV). The brand intends to begin production of fully autonomous vehicles in 2021.
Kruger says Ford is not in a race to be first with these new technologies but does want to be the most human-centric.
“As market opportunities, regulatory environments and consumer perspectives continue to evolve, we will apply the technology in the most appropriate way for our customers.”
But, according to him, local “demand to move away from the internal combustion engine is not prevalent yet”.
South Africans love their vocal internal combustion engines, but also baulk at the premium to be paid for new technology.
While a government subsidy would make cars like EVs more affordable, the country is also lagging on the infrastructure needed to support revolutionary technologies, Kruger points out.
“Investment is needed to support innovations, but this needs to be pulled by demand, which will no doubt begin to develop in the coming years,” he says.
“The business case for many of these innovations is going to be challenging until we reach critical mass on technology, optimal scale, and demand.
We are not there yet in South Africa. Our strategy is to provide more capability, productivity, and performance as well as better fuel economy based on whatever the best mobility solution is for that market.
As markets evolve and mature, we will begin to offer a more comprehensive range of solutions.”
FORD’S LOCAL MANUFACTURING FOOTPRINT
Ford manufactures the Ford Ranger (bakkie) and Ford Everest (SUV) at its Silverton Assembly Plant in Pretoria.
The Ranger is sold locally, and also exported to over 148 markets in Europe, the Middle East and Africa.
Local production of the Everest commenced in 2016, and is exported to markets across sub-Saharan Africa.
Ford also produces engines at its Struandale plant in Port Elizabeth, exporting to Argentina, Thailand, North America, India and China.
Given sizeable investments made recently, there are currently no further investment plans, said Casper Kruger, managing director of Ford Motor Company Sub-Saharan Africa.
In 2016, Ford invested R2.5bn to build the Everest and in November 2017 announced a R3bn investment for Ranger production expansion in SA, and to produce a new model in the Ranger line-up, the Ford Ranger Raptor.
“This R3bn is a vote of confidence and a vote of commitment,” he said.
Automotive manufacturers are reliant on government incentives to make it financially viable to manufacture locally.
At the time of the interview, Kruger said they were in final discussion stages to confirm the new incentive programme that will replace the Automotive Production and Development Programme (APDP), which comes to an end in 2020.
“We are here and want to stay here. Obviously, there is a bigger role to play from an APDP perspective. All those policies and discussions are key stakes in the ground in order to make sure we have a successful industry.
If you cannot export, there is not really a model here. The local volume is just too small.
“The focus is on ensuring we have the right platforms; strong exports, cost-effectiveness and world-class quality in order to make sure the industry is solid and able to compete with plants in Thailand, Mexico and Europe.
If we can secure that, we can invest more and bring more models in, but it’s not an independent decision.”
This is a shortened version of an article that originally appeared in the 15 March edition of finweek. Buy and download the magazine here.
