Isuzu sales records tumble… But how?

We’ve all heard how tough it is out there, trying to get any kind of motor vehicle into Australia to meet the current demand.

It’s the perfect supply-and-demand storm: Government incentives have sent the market into overdrive, demand for commercial vehicles is high, dealers can’t get enough stock. The war in Ukraine has added to supply chain issues, shipping is in crisis and the vehicles can’t get here.

The Federal Chamber of Automotive Industries has said that supply chain issues continue to constrain our market.

FCAI Chief Executive Tony Weber said in a media statement this week that the fallout from the COVID-19 pandemic continues to hamper automotive manufacturing. This, combined with the war in Ukraine and shipping issues, means that the supply of new vehicles hitting Australia’s shores cannot keep up with demand.

“Globally, car makers are continuing to suffer from plant shutdowns,” Mr Weber said. “In Europe we have component supply heavily impacted by the conflict in Ukraine.

"Microprocessors continue to be in short supply and global shipping remains unpredictable.”

And Mr Weber added that it is “unlikely we will see supply chain issues resolve in the near future”.

So how can a company like Isuzu continue to break its own sales records?

Following the announcements of this year’s first quarter and half-yearly sales results, we sat down with the company’s National Sales Manager Les Spaltman to see how they’re doing it.

In June, Isuzu delivered 1521 trucks, which is an Isuzu record for the number of trucks delivered in a single month.

In May the company sold 1140 trucks, which is the third-highest sales month ever, only being edged out by June 2020 in which Isuzu sold 1170 units (which was a record in itself at the time).

So, how are they doing it?

“It’s a combination of factors,” said Mr Spaltman. “The growth can be attributed to a stimulated market, I’d suggest.

“But if I think back to the start of COVID, the wheels were falling off everywhere, everyone was panicking and we halved our order [from the factory] maybe for two months.

“And then it just kicked off. And at the kick-off point, most of the stock in the country was allocated to the dealers, and from that point on we’ve been chasing our tails a bit to get the volumes we need to end up with this result.

“During that time it was a matter of convincing people in our organisation that we needed the volume that we were asking for, and they were big volumes.

“In one month we ordered 2500 vehicles, which was a record. That was in December 2020.

“To achieve those volumes, there’s a lot of trust. It’s the relationships that we have with Japan, and the respect that our head office has for the Australian market.

“If I can call anyone out on it, it would have to be Tak [Takeo Shindo, Managing Director & CEO of Isuzu Australia Limited].

“He is very well connected in Japan and can help us a great deal. Having said that, I think Japan really values the volumes they get out of the Australian market. They value the relationship we have with the Australian consumer as well,” Mr Spaltman said.

Asked about the impact of the supply chain issues, Mr Spaltman chuckled and said: “Don’t you remember that two years ago my hair was blond? It’s been terrible.

“But really it’s because we ordered more. I think we identified the opportunity a bit quicker. I ordered it [the big numbers] because traditionally we hold a bit of stock on grass, and the dealers hold a bit of stock, and I could see a gap forming. There was a gap where the dealers were ordering stock and we had to order stock to support the dealer network and keep some in reserve.

“When things took off, the dealers sucked up all the stock we had in the country and that got us through the first eight months or so. After that it was a matter of seeing the opportunity and ordering accordingly.

“We had meetings with our dealers, and they could see that there was a possibility that we could do some big numbers, so they were on side.

“In our business we have to pay for the stock before it comes into the country so the directors were probably looking at that and trying to balance it all up, but I’m a salesman and I was just saying ‘give me the stock and we’ll deal with it’.

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“But the dealers were screaming for it too. Even now, we’d have record numbers of trucks in the dealerships,” he added.

But why is it, we asked, that other manufacturers had more trouble than Isuzu when it came to the supply chain? Could it be that now is a good time to have a robust and perhaps less complex truck, as opposed to a more technologically advanced truck?

“I’d suggest around their emissions yes, and most of the semi-conductor issues are impacting the safety features,” said Mr Spaltman. “So our products are – as you say – a robust product and even though we’ve had recent upgrades with the all safety features, these haven’t been impacted as much as they have some other manufacturers.”

Shipping has been an issue for everyone and we asked Mr Spaltman how that has affected his supply.

“Shipping has been a big issue,” he said. “At the end of last year and the start of this year there were record numbers of cars coming in, so we had ships waiting out there at sea that couldn’t come in, couldn’t dock. We nearly ran out of trucks.

“The floods affected us too; we had ships that couldn’t dock in Queensland due to the floods and had to be diverted Sydney. Then they couldn’t dock there because of floods, so they had to go around to Perth, which created more logistical problems. It certainly hasn’t been easy.

“It all created delay, and delays are important because it affects the expectations of the customers. We’re certainly getting the volume through, but the lead times can change with delays.

“A few years ago, the lead time on a truck would be three months and now it’s more like eight.

“It’s all evolving – you fix one thing and another thing goes wrong. It certainly has been a challenging time.”

At a press conference earlier this year, Mr Spaltman said the potential was there in the market for Isuzu Australia Limited to sell around 12,000 units.

Asked at this meeting what he thinks the company will achieve, he said: “Around 13 [thousand] with a potential upside.”

That would be yet another record for the company with the previous record being last year with 10,174 units.

And it will also hand company its 34th year as market leader.