Associated Motor Holdings (AMH) and its joint venture with the McCarthy Motor Group – Amalgamated Automobile Distributors (AAD) – made a huge impact on vehicle sales in South Africa in 2010. It was particularly strong in the passenger car market and in September, when local automakers were hit by strikes, the AMH/AAD combination outsold all other companies.
AMH/AAD, which gives NAAMSA only total sales figures in five categories – small, medium and large cars, SUVs and light commercial vehicles – with no breakdown by brand or specific models, increased its passenger car sales volume by an astonishing 73,7 per cent in 2010. This lifted its total from 33 424 units in 2009 to 58 049 at the end of 2010, which equated to an increase in market share of 4,3 per cent, moving its share up to 17,2 per cent and so overtaking Toyota/Lexus (50 074 cars sold and a 14,9 per cent share) for runner-up position behind the Volkswagen Group in terms of passenger car sales.
This is a strong showing for a company that started out giving NAAMSA total monthly sales figures for its brands – then Citroën, Daihatsu, Hyundai, Kia and MG Rover – in 2002, when its total sales for the year amounted to only 10 194 units.
In fact, in September last year the AMH/AAD car sales of 6 778 units topped the list, ahead of General Motors SA (GMSA), with 5 693 units sold, and the dominant car seller, Volkswagen, which sold 4 791 units. Admittedly Volkswagen was particularly hard hit by the strike action, but it underlined the benefit of being an importer which is not affected by local work stoppages.
The increasing sales by Imperial Group-owned AMH and associated AAD are heightening the general unhappiness among the companies that do provide detailed sales figures to NAAMSA as the importers are seen as having an unfair competitive advantage.
Adding in the importing group’s light commercial vehicles lifted its total to 67 170 units for a 13,6 per cent share of the overall SA vehicle market in 2010. This placed it just behind Volkswagen (14,3 per cent), but trailing far behind Toyota, which sold 101 963 vehicles for a 20,5 per cent share. Toyota, which completed its 31st consecutive year as market leader in SA in 2010 has now entered its 50th year in SA, as Toyota SA was formed in 1961.
The increasing number of imported vehicles into SA – including about 70 per cent of passenger cars – is drawing criticism from several quarters: these include the component and tyre manufacturers who see the development as threatening jobs with the component manufacturers having shed 20 000 jobs since the global economic downturn began in 2007.
OVERALL MARKET
Overall it was a very good year for the industry, with growth of 24,7 per cent in total volume when the non-reporters are included. This lifted the total to 492 956 units, compared to the 395 186 vehicles sold in 2009. The value of total vehicle sales for 2010 is estimated at R130 billion – up 20 per cent over 2009.
It also seems the German manufacturers did not hold back December sales for reporting in January, as has been the case in the past – making the figures for these two months a realistic reflection of market activity.
Factors that influenced the market positively included a South African economy that recovered much quicker than anticipated with a 3 per cent growth rate in GDP. The JSE experienced a strong inflow of foreign capital and there were meaningful further declines in inflation and the prime lending rate. There was also a modest improvement in business and consumer confidence, a surprisingly strong Rand and a marked increase in disposable income, while the resounding success in staging the FIFA World Cup put the country in the limelight in a very positive fashion.
The motor industry itself experienced a low level of new vehicle price inflation, a pronounced swing to buying new instead of used vehicles while the imported vehicle distributors AMH and AAD made significant inroads into the market. The industry also benefitted somewhat from an improvement in the credit application approval ratio, while sales were driven by attractively priced new entry-level cars and strong buying by car rental companies. In fact, the latter continued to underpin passenger car sales, accounting for 13,3 per cent of the volume.
On the other side of the coin, the industry had to deal with strikes in August and September that impacted negatively on the market share of the local manufacturers as well as the introduction of a controversial Carbon Emissions Tax on September 1.
During the year the number of vehicle brands in the country grew to 57 and the amount of model derivatives swelled to 1 800, stressing the competitive nature of this comparatively small market.
Taking the non-reporters out of the equation, Toyota had a 23,7 per cent share of the overall market, which was 1,9 per cent down on 2009. The Volkswagen Group ended the year with 70 597 units sold and a 1,7 per cent improvement in share, moving up to 16,6 per cent.
GMSA and Ford held onto third and fourth spots in the overall market, while Nissan overtook Mercedes-Benz by a small margin for fifth position. BMW remained in seventh, but Renault and Honda swopped places, with the former moving into eighth with improved share, while Honda dropped back with even lower volume than in 2009 and the only company to sell less vehicles in 2010 than in the previous year.
The Tata-owned Jaguar/Land Rover combination held onto 10th spot, but was only 18 units ahead of parent Tata, compared to a gap of 70 units a year previously.
PASSENGER CAR MARKET
The passenger car market proved the bright star in the SA vehicle sales firmament in 2010 with a jump of 30,6 per cent if the non-reporters are included, which makes it the biggest year-on-year increase since 1963 (without the AMH/AAD contribution the growth was 24,2 per cent).
Toyota, hampered by a lack of new products and the ongoing global recall campaign, was the biggest loser in terms of its share of the local passenger car market, dropping 2,4 per cent and slipping to 17,9 per cent, while its arch-rival, Volkswagen, improved its penetration by 1,8 per cent and stamped its domination on this segment of the market with a 24 per cent share.
There is then a big gap to the “also-rans”, being General Motors, Mercedes-Benz, Ford and BMW, which took the next four positions in that order. GMSA, with a bevy of new model introductions, put up a stellar performance to jump from sixth at the end of 2009 to third, while MBSA, Ford and BMW all slipped back one place.
Nissan retained its seventh spot, while Renault overtook Honda for eighth and Chrysler SA rounded out the top 10 in place of Jaguar/Land Rover.
In terms of individual model ranges, the newly-introduced Polo Vivo hatch and sedan was a runaway winner with an 8,3 per cent share from 23 297 units sold – well ahead of the Toyota trio of Corolla/Auris/Verso (19 388 sales) which lost 1,1 per cent in share, dropping to 6,9 per cent.
The new Polo is in third spot, ahead of the Mercedes-Benz C-Class and BMW 3-Series, which had been in third and fifth positions a year previously. The Toyota Yaris, which was fourth at the end of 2009 slumped significantly to seventh spot in 2010 and a price-repositioned Yaris Yen has been introduced to try and improve the situation of falling volume.
Toyota’s Fortuner SUV continues to be very popular and has moved up from seventh to sixth position in the rankings at the expense of the Ford Fiesta, which slipped to eighth as it encountered a tough contender in its own ranks in the form of the Indian-built Ford Figo.
The Chevrolet Spark is proving increasingly popular and has jumped into ninth spot, with its Aveo stable mate now dropping behind it.
COMMERCIAL VEHICLES
The total commercial vehicle market grew by 13,7 per cent between 2009 and 2010 with light commercials up 13,2 per cent, mediums up 4,5 per cent, heavies up 15,1 per cent and extra heavy trucks having another good year with an increase of 32,1 per cent. The bus market grew by only 8,2 per cent despite the FIFA World Cup which was hoped to provide a far bigger boost to the economy than seems to have been the case.
The somewhat disappointing sales improvement in the commercial vehicle segment has been ascribed to a slowdown in investment in infrastructure projects, corporate earnings remaining under pressure, ongoing company failures and the fact that the upturn in economic activity only benefitted some sectors of the economy.
LIGHT COMMERCIALS
Toyota remains the powerhouse of the local light commercial vehicle market with the strong-selling Hilux one-ton pick-up and Quantum minibus and van as well other products such as the Avanza Van and Land Cruisers. In fact the Hilux was the top-selling vehicle model in South Africa last year and the Quantum averaged more than 1 000 sales a month.
Toyota gained a further 0,2 per cent, moving up to 38,3 per cent from sales of 47 741 units in a 146 691 unit LCV market. GMSA held on to second spot, albeit with a loss of 1 per cent in share to 21,2 per cent, while Nissan moved up from fourth to third – overtaking Ford – as it improved its share by a very impressive 2,6 per cent to 17,8 per cent.
Ford increased volume marginally but slid back 1,4 per cent in penetration and must be dreading the day when the Bantam is discontinued and it has only one-ton bakkies in the LCV range.
Two of the German manufacturers, Mercedes-Benz and Volkswagen, swopped places, with VW improving its share by 0,6 per cent as its long-awaited Amarok one-ton bakkie finally came to market. December sales of only 192 Amaroks put it way down in 11th place on the top-selling LCV list, equal with Toyota’s Land Cruiser, so it will be interesting to watch its progress as the line-up expands to one-ton workhorse models.
The Indian makers, Tata and Mahindra, both changed places on the top 10 list, with Tata showing a substantial sales improvement (up 71,6 per cent) as it moved up to seventh from ninth, while Mahindra slipped from seventh to eighth despite selling 41,1 per cent more vehicles.
Fiat, with its rather limited range, fell from eighth to ninth, while Chana – the only Chinese brand to report its sales in detail to NAAMSA – returned to the top 10 in last place.
As mentioned previously, the Toyota Hilux was not only the top-selling light commercial vehicle, with 31 856 units sold – 16,9 per cent higher than in 2009 – but it was also the most popular vehicle in SA overall, selling 36,7 per cent more units than the top-selling car, the VW Polo Vivo. This equated to 25,6 per cent of the market, which was a year-on-year improvement of 0,8 per cent.
The Chevrolet/Opel Corsa Utility, which underwent a name change during the year, retained its runner-up position with 15 117 units sold, for a 12,1 per cent share of the LCV market. Third place was filled by the Quantum, with 12 526 units sold, well ahead of the Isuzu KB.
Fifth place and best performer in the strong Nissan LCV line-up was the NP200 pick-up, with its NP300 Hardbody and Navara also in the top 10. Other models in the top 10 were the Ford Ranger and Bantam and the Mazda BT-50.
Volkswagen’s Amarok sold 814 units in the two months it was on the market and its progress will be watched with interest, following rave reviews in the media.
MEDIUM COMMERCIALS (3 501-8 500 kg GVM)
This segment continues to be a battleground between Mercedes-Benz Sprinter – mainly as panel van – and the Hino 300, which is the new name for the Toyota Dyna that ruled the roost for many years since introduction in 1965. In fact, the combination of Dyna and Hino has topped sales in the SA medium truck market for the past 29 years, even though it only has chassis cabs in the range.
Last year the Hino 300 sold 1 808 units for a share of 23,9 per cent – an improvement of 1,3 per cent over 2009. This puts it 3,8 per cent ahead of the Sprinter. The new Isuzu N-Series is proving very popular, and it jumped 4,7 per cent in share to 12,3 per cent.
The Volkswagen Crafter lost some share (down 1,1 per cent), but still overtook UD Trucks (previously Nissan Diesel) and moved up to fourth position.
HEAVY COMMERCIALS (8 501-16 500 kg GVM)
This segment saw the changing of the guard at the head of the sales table, with UD Trucks overtaking Hino with the former gaining 3,3 per cent in share and going up to 26,6 per cent while Hino lost 4,8 per cent and slipped down to 23 per cent.
Isuzu also lost share going down by 2,1 per cent to 20,9 per cent despite launching a new and broader range. The Mitsubishi Fuso improved both volume (up 37,5 per cent) and share (up 1,7 per cent) while retaining fourth, ahead of Tata and Mercedes-Benz.
EXTRA-HEAVY COMMERCIAL (Above 16 501 kg GVM)
This is far and away the healthiest segment with strong growth and many competitors. Mercedes-Benz retained its customary leadership position, but lost 4,2 per cent in penetration as it slid to a 19,9 per cent share. This brought it much closer to second-placed MAN, which improved its penetration by 1,4 per cent to 13 per cent, while Volvo surprised with a move from fifth to third, due to a 69 per cent growth in volume. There was a close tussle for fourth spot behind Volvo with ever-improving Scania (share up 1,4 per cent from sales of 892 units), edging out UD Trucks by a solitary unit.
Freightliner, which has benefitted from ongoing restructuring at some of its rivals over the last few years, slipped down the log from third to sixth in 2010.
BUS MARKET (Over 8 501 kg)
Much was expected in terms of bus sales with the staging of the FIFA World Cup in South Africa, but this did not materialise and sales were only 117 units or 8,2 per cent up on the 2009 figures, with a total of 1 551 buses sold during 2010.
Mercedes-Benz was the dominant player with its share jumping from 18,7 per cent in 2009 to 44,7 per cent a year later from sales of 694 units. MAN, the leader in this segment in 2009, was a solid second with a 25,1 per cent share, compared to 31,1 per cent in 2009. Scania lost 7 per cent in share, but still managed to remain in fourth spot, ahead of Iveco, which shed 14,6 per cent as it missed out on major orders.
FUTURE LOOKS BRIGHT FOR SA MOTOR INDUSTRY IN 2011
There is a far more positive outlook for 2011 than was the case at the start of 2010, when most industry commentators took a fairly cautious approach and predicted growth of about 10 per cent in vehicle sales.
Further growth is expected for 2011, with a wide range of factors seen as “influencers” – most of them positive. These include the sustainability of the global and local macroeconomic recovery, with GDP growth of 3,5 per cent predicted for South Africa, the growing levels of business and consumer confidence, backed by rising indices on more than one indicator, as well as the “wealth effect” created by the strong improvement in the JSE All Share Index.
Other positive factors include the strength of the South African currency – particularly against the Euro and Yen, which are the major trading currencies for the local motor industry – and the comparatively stable vehicle price inflation since 2009. Further favourable factors are the prime lending rate, which has fallen 5 per cent to 10 per cent since 2008, and the increasing willingness of financial institutions to grant credit in the light of an improvement in the ratio of household debt to disposable income. This figure is still high, although at just over 75 per cent (compared to 55 per cent in 2004), but it is at least showing a downward trend. Then there is ongoing replacement demand by fleets that is being driven by the ageing vehicle population with the replacement cycle of new cars stretching from 29 months in 2006 to 45 months at present.
South Africa also has one of the toughest automotive trading environments in the world, with one of the widest vehicle selections on the globe and a multitude of dealerships, which lead to intense competition and aggressive marketing, with benefits to the consumers. However, it is not all roses as there are several factors which will impact negatively on the vehicle market in 2011. These include an increase in company car fringe benefit tax, the tolling of all major freeways in Gauteng, expected high fuel prices and further hikes in electricity tariffs.
Here are some of the forecasts for 2011:
NAAMSA: 370 000 cars, 155 000 LCVs, 25 000 medium and heavy trucks and buses for a total of 550 000 units, which is improvement of 11,6 per cent.
The McCarthy Motor Group’s forecast is very similar and also arrives at a total of 550 000 vehicles, made up of 375 000 cars (up 11,2 per cent), 150 000 LCVs (up 12,1 per cent), 8 000 medium trucks (up 5,9 per cent) and 17 000 heavy trucks and buses (up 17,5 per cent).
