Sub-Committee: Public Protector Report on Toyota Quantum Panel Vans

Meeting report

The Chairperson opened the meeting and welcomed Members. He said they had limited time for the meeting due to internal reasons. He invited the Toyota delegation to make their presentation.

Mr Andrew Kirby, CEO, Toyota SA, said he appreciated the opportunity to come before the Committee. He said they had met with the former and the current Public Protector in the past few years. One of the remedial actions in the Public Protector’s report was that the CEO of Toyota should consult with the Minister of Transport in order to participate in stakeholder engagements. He had met with the Minister of Transport and they had engaged on this.

The presentation answered nine questions:

Question 1:  When was the first Toyota quantum panel van imported or manufactured in South Africa?

Answer: 2005

Question 2: The number of manufactured Toyota quantum panel vans since their introduction into the market?

Answer: Toyota had different models that they were selling since 2005. They sold 6 004 of the panel vans which were used for the illegal conversions. They also sold 1 000 long wheelbase panel vans.

Question 3: Recommended retail price for a Toyota Quantum panel van versus a passenger carrier minibus vehicle?

Answer: The panel van price in 2007 was R191 700 and the taxi price was R169 104.

Question 4: Under what circumstances or for what alternative use had Toyota approved panel van conversion?

Answer: The National Regulatory for Compulsory Specifications (NRCS) recognised several body builders or converters, and Toyota had no control or influence over the applicable regulatory compliance processes between the body builders and the NRCS. However, Toyota South Africa had approved the conversion of a panel van to an ambulance for the department of Health. They received the specification via an RT57 contract circular from the National Treasury during the tender process. Once the specification was received, Toyota would appoint a service provider and an accredited bodybuilder to convert the panel van to an ambulance as specified in the RT57. Toyota South Africa would then conduct verification tests to ensure that the conversion was in line with the specification and within Toyota standards. Once they were happy with the quality, they would make an application to the NRCS. Once the NRCS had given approval, the new classification of the van as a passenger carrying model would be issued. Toyota currently had one approved ambulance conversion and one accredited bodybuilder, and they sold those conversions to the Department of Health.

Question 5: When did Toyota first become aware of Quantum panel van conversions in South Africa for use in the minibus taxi industry?

Answer: 2005

Question 6: What steps did Toyota take to inform government, Department of Transport (DoT), the Department of Trade and Industry, the South African Bureau of Standards (SABS), the NRCS, and the financial sector of these conversions and the view of Toyota on the safety of such conversions?

Answer: In 2009 Toyota South Africa issued a directive to the SABS, NRCS, and the DoT confirming that Toyota had not and would not issue letters of authority for conversions of the Toyota Quantum panel vans into Toyota passenger carrying taxis since panel vans were commercial vehicles designed to carry goods. Toyota also informed its dealers that Toyota did not support any illegal conversions. Toyota continuously expressed its stance that it did not condone any illegal conversions since the first incident of illegal conversion was detected in 2005.  Toyota was not a regulator for the purposes of registration; the onus was on the DoT and NRCS to monitor and check that the registrations were in line with classification.

Question 7: What steps did Toyota take after learning that some of the converted vehicles were being approved for retro fitment?

Answer: A communication was issued to Toyota dealers in 2005 in which it was clearly stated that the modification was not acceptable to Toyota South Africa and the warranty terms would be cancelled on all vehicles modified. Toyota also issued a notice in 2008 confirming that an extensive investigation was being conducted and that all illegal conversions should not be condoned.

Question 8: What measures were put in place to mitigate the illegal conversion of goods carrying vehicles into passenger carrying ones, or to ensure that such incidents did not take place at all?

Answer: From 2005 to 2009 Toyota specifically communicated and acted in a manner that was reasonably expected at that time. In support of mitigating illegal conversions, Toyota ensured that it did not provide to the NRCS the manufacturer approval documentation which would facilitate the registration of the conversion of the vehicle in question.

Question 9: Whether Toyota had a monitoring mechanism to ensure that this practice did not recur?

Answer: Toyota had taken every precaution and was committed to ensuring compliance with the legislation and regulations applicable in ensuring safe and reliable transport. Toyota continued to make every effort to ensure that the dealers did not participate in illegal conversions. They were continuously evaluated to ensure compliance.

Discussion

Mr C Hunsinger (DA) thanked the delegation from Toyota. He said he had studied the Public Protector’s report and he had questions which had not been answered. What was Toyota’s position and involvement regarding the retro fitment process? What was Toyota’s involvement in the technical task team that was established around 2010 to legalise those illegal vehicles? What were their views on compliance with SA National Standard (SANS) 10267? In terms of retro fitment process and the price of R18 118 at which the conversion could be made, did they see those conversions as adequate, looking at the frame, structure and longevity of the panel van as opposed to how a taxi was constructed?

Mr Hunsinger said that Toyota was very quiet about the involvement of Toyota Financial Services (TFS). He asked whether it fell under the authority and control of Toyota and said TFS financed the conversions. Looking at the final report, he asked if it contained all the information Toyota felt should be known. Was the engagement of the CEO of Toyota with the Minister of Transport the first? Did he have any engagements with any other Minister of Transport in relation to the panel van conversion? Why and on what basis did Toyota offer remedial compensation?

He thanked the delegation for sharing with the members the technicalities around ambulance conversions. Members were quite familiar with what was necessary for the conversion in terms of standards and processes. Having known and been involved in the process of what was required in terms of standards and specification for ambulances, why did Toyota not apply it to taxis? To what extent did the parent company, Toyota Japan, have knowledge about this regulatory failure and the collusion of certain companies in the panel van conversion?

Mr K Sithole (IFP) thanked Toyota. He said Toyota had received the information about conversions in 2005, yet they did not meet the relevant Ministers until February 2021? What was the reason? Did they have the full information about how many conversions were involved in car accidents? According to the report, Toyota issued a notice to its dealers in 2005 requesting them not to participate in the conversion of panel vans into taxis. How many taxis were bought from Toyota per province after they received the information?  The report stated that the notice issued by Toyota was not practically instructive as it opened room for manipulation. Were there any consequences put in place by Toyota to deal with the dealers that were selling those panel vans? He asked Toyota to unpack what they meant when they said Toyota was not in a position to consent to the general conversion of goods vehicles.

Mr L McDonald (ANC) asked Toyota to give the Committee a breakdown of how many retrofit kits were sold to the private sector and how many to dealers since 2005. He wanted to know about the recovery of VAT on panel vans by salespeople or dealers. Many people used the VAT refunds to then convert the panel vans into taxis. Those people stole from government, and that would also mean that Toyota and the dealers were complicit in VAT fraud.

Ms N Nolutshungu (EFF) thanked Toyota for the presentation. She asked what - besides their commitment to adhere to what was recommended in the Public Protector’s report, media releases and communications to the dealers - they had done to protect their name and to ensure that commuters were safe? Had they done any investigation to establish how many dealerships were implicated? What action was taken against those dealerships?

The Chairperson said the sentiments from the Members showed some dissatisfaction. He invited answers to their questions.

Answers to Questions

Mr Kirby said he understood the concerns of the Members and misunderstanding of some of the processes. On the question of the compliance with SANS 10267 and Toyota’s approach in supporting the retrofitment of the taxi vehicles, he said their principle was very clear: A panel van was not adequately designed to be able to take the anchor points for the seats and seatbelts to convert it to a passenger carrying vehicle. The modifications required for a safe passenger vehicle would cost multiple times more than R18 000. They did not at all support the conversions or the retrofit kit or agree that the retrofit kit could be modified further to be safe. What they had offered was their engineering expertise to help with assessment in the design going forward, but that was not taken up.  The conversion was not adequate and was unsafe.

On the question about Toyota Financial Services, he said they were not being quiet about TFS. It was a joint venture between three different parties and Toyota South Africa owned 33 percent. Toyota sold no conversion kits. The dealer would sell the panel van and later that vehicle would be converted into a passenger carrying vehicle. He became aware that this was happening when he was driving and came across a police vehicle which was a converted panel van. There were no records at Toyota that the conversions were happening. They could not answer some questions because they did not know. If there was VAT fraud it was committed by the customer, not Toyota. They had not engaged with other transport ministers over the years. The engagement that they had in February 2021 concerned this issue. They did not want to appear as if they were complicit in any illegal activities.

He confirmed that Toyota Japan had been fully aware of all the investigations, discussions and final findings of the Public Protector. Toyota Japan was not prepared to give Toyota South Africa any authority for the conversion of panel vans into passenger carrying taxis. To protect their name, they only supported the conversion of panel vans into ambulances which only carried 3 people and which were sold to the Department of Health. There was also another process where private hospitals purchased panel vans and took them through bodybuilders to the NRCS to be classified as ambulances. Toyota did not have control of that process. The process of conversion was very open. Bodybuilders could do the conversions and prove to the NRCS that they had complied. Toyota could not jump in on that process.

Follow up questions.

The Chairperson thanked Mr Kirby. He asked if any warranties had been cancelled because of these things that Toyota was not aware of? If so, how many? Had any dealership agreements been cancelled because of involvement in these illegal transactions?

Mr McDonald said Toyota was being disingenuous with the Committee. If they wanted to help, they would have given the Committee factual information. They sold more seats and more parts than were required for the panel vans they had built. They must have had some statistics to tell the Committee how many parts had been sold to those that were converting those vehicles.

Answers

Mr Kirby said he took offence at being labelled as disingenuous. They had answered the questions that were put to them. If there were any other questions, they would be completely transparent in answering them. He confirmed that they sold no seats, no parts and no kits for conversions of panel vans into passenger carrying vehicles.

Committee Members were told that where records showed vehicles had been converted, their warranties would be cancelled. The numbers would have to be confirmed. No dealership agreements had been cancelled because they did not know of any dealer conversions. There were very strict rules when it came to dealer recruitment.

The Chairperson asked Mr Kirby if he would be willing to send more information to the Committee if the Committee sent him more questions.

Mr Kirby said the Committee was welcome to send him questions. He also admitted that he needed to think about how to visualise and explain the process of how their vehicles moved from wholesale to dealer and to the customer and what happened with the registration process and how that was different from the illegal conversions. He would consult with his team and see how they could make everything clearer. This was very serious. Toyota sympathised with the whole process. Their interests were getting people into safe vehicles and owners out of these illegal conversions.

The Chairperson thanked Mr Kirby and his team. He said it was not their intention to cast any aspersions on Toyota, but to get to the bottom of the matter and make necessary recommendations.

The meeting was adjourned.