It seems that the growth in vehicle sales in South Africa is going to be far bigger and more enduring than most industry commentators thought originally. Although there was plenty of good news arising from the sales boom in the second quarter of 2005, there were also some dark clouds in the form of renewed activity at the Competition Commission and a scandal at Volkswagen (see separate article) as well as a drop in the exports of built-up units (another separate article). The industry also lost a day's production with the national strike on June 27 and Volkswagen had a lengthy labour dispute at its parts warehouse in Gauteng.

However, there was far more good news than bad!

For the first time in the history of the local motor industry more than 50 000 units were sold in a single month by manufacturers that report their sales through the National Association of Automobile Manufacturers of SA (Naamsa). This happened in June, when 50 044 units were retailed. It was an amazing 31% up on the figure for June 2004 and well ahead of the previous monthly sales record of 47 942 units, set in June 1984 - exactly 21 years ago!

At 263 481 units, year-to-date new vehicle sales were almost 28% higher than for the first six months of last year. Total reported Naamsa sales for the past 12 months (July 2004 to June 2005) totaled 507 035 - the first time that more than half a million vehicles have been sold in any 12-month period in South Africa. This is well ahead of the current Naamsa-reported sales record of 453 555 sales set in calendar year 1981 and bodes well for a new record being set in 2005.

A very interesting phenomenon in this phase of strong growth is the rapid rise to prominence of the Imperial Group's Associated Motor Holdings grouping and its associated companies that do report their sales to Naamsa (Renault, Tata Trucks, Tyco Trucks and Accordion Investments). The grand total for this grouping for the first six months of 2005 is 42 142 units, putting it marginally ahead of Volkswagen (41 697 units) in the overall vehicle market and places AMH in a very strong position when compared with manufacturers and distributors who have been operating in South Africa for decades.

The growth of the non-reported AMH brands (Hyundai, Kia, Citroën, Daihatsu, Bentley, SsangYong and bankrupt MG Rover) is nothing short of amazing. Sales in the first six months of 2003 totalled 5 123, which then rocketed to 13 220 for the first half of 2004 and more than doubled again to 27 442 this year.

Most of AMH's volume comes from its Korean brands and this ongoing sales success shows that these brands are now well established and accepted by the South African public after Billy Rautenbach's "Hyundai/Wheels of Africa" debacle of the 1990's had been a major setback for the image of Hyundai.

Manny da Canha's AMH group is not slowing down with its expansion plans either, having already added the Lotus sports car brand to its portfolio and, most recently the Malaysian Proton brand, as a replacement for MG Rover. AMH is also expected to be the first grouping to launch a Chinese automotive brand in South Africa.

Another new brand bound for South Africa, but not through the AMH network, is Ford-owned Aston Martin, which is due at the end of the year and will be sold through Daytona Luxury Cars in Sandton.

Although AMH steadfastly refuse to divulge full sales details by individual model and nameplate to Naamsa, they started, in May, giving a breakdown of its sales in terms of categories - small cars (1 400 cc or less), medium cars (1 400 - 2 500cc) large cars (over 2 500cc), 4x4 recreational/SUV and light commercial vehicles.

Despite the dramatic growth by AMH and Volkswagen's increasing dominance of the passenger car market, it is still Toyota that sets the pace as top selling overall brand, although it continues to lose market share. Evidently Toyota is suffering from production constraints at its plant near Durban, while a huge new paintshop is under construction. The 200 000-unit per annum project is scheduled for completion in the middle of next year, but in the meantime Toyota has to funnel all its local production through a much smaller facility.

Even so, the market leader for the past 25 years still managed to post an all-time industry record for a sales month, with 11 248 units sold in June, helped by very strong sales of the new Hilux. The previous record was set by Toyota in October 1996, when 11 026 units were retailed.

Toyota's market share at the midpoint of 2005 is 21,5% compared to 25,6% a year previously. VW, in turn has moved its share up from 15,1% to 15,8%. GMSA has overtaken its archrival, Ford, to move into third place, with an increase of 2,6% in penetration, by far the biggest increase in the industry. DCSA held onto fifth position, ahead of Nissan, BMW and Renault. Peugeot has overtaken Fiat for ninth, with Fiat slipping off the top 10 leaderboard this year, displaced by newcomer Accordian Investments (Tata Indica and Indigo passenger cars and the Telcoline pick-ups).

Despite slipping down to only a 1,4% share of the total vehicle market, Fiat has been in the news a lot lately. First came the news that the Italian company would not renew its long-running assembly contract with Nissan when it expires in July 2008. Could this open the door for Renaults - including the cut-price Logan - being assembled at Nissan's plant in Rosslyn as these two companies now have very strong global links? Only time will tell.

Fiat Auto SA did not announce any manufacturing plans for the future other than to mention that the company had "important relations" with former partner General Motors, so production could move to Port Elizabeth. In the meantime Fiat has been announcing a number of component export contracts valued at almost R1-billion for catalytic converter components and exhaust heat shields. Fiat has also recently joined the growing, but highly competitive market for half and three-quarter ton pick-ups with the introduction of the Brazilian sourced, but locally built Strada, which is based on the Palio passenger car. It will go head-to-head with the Ford Bantam, Opel Corsa Utility and Nissan 1400.

The passenger car market for the first six months of 2005 totalled 175 217 units, which was 28% up on the 136 789 units retailed in the first half of 2004. Volkswagen, which had trailed Toyota at the halfway mark in 2004 is now well ahead in 2005, with a 23% share of this market, compared to 19,2% - a drop of 4,9% - for Toyota.

One of the reasons for Toyota's slide is the fact that it has not expanded its model range at the rate of some of its rivals, and in recent months halted production of the Condor wagon and Stallion panel van that had provided steady sales volumes since 2000. For example, Volkswagen has 80 individual passenger car models compared to only 31 for Toyota. VW also adds in 47 Audi models, while Toyota has only four models in its Lexus luxury car range to add to those that wear the Toyota logo.

DaimlerChrysler maintained third position, ahead of Ford and GMSA, with all three companies posting gains in share. BMW remained comfortably in sixth position, despite running out the E46 3 Series model range.

Renault, which is now the fastest growing brand in South Africa, with sales up an amazing 44% year-on-year remained in seventh place with a 0,6% growth in share. They are also running a very eye-catching media campaign highlighting the success of its Formula 1 racing car to back up the impressive sales growth in South Africa. The French manufacturer sold 1,3-million vehicles worldwide in the first half of 2005 for a 4,2% share of the global market and consolidated its leadership position in Western Europe. In the "old days" it went "win on Sunday, sell on Monday" - with Renault this still seems to be the case!

Renault's French rival, Peugeot is also increasing its car sales significantly - up 42% year-on-year - passing Fiat Auto in the process of moving up to ninth place on the sales table. Fiat really seems to be battling, with sales volumes down in the rising market and share dropping by 0,8% to only 1,9%.

In terms of individual model sales, Toyota's triumvirate of Corolla/RunX/Verso continued to dominate, although losing 1,2% in market share (11,1% down to 9,9%). Volkswagen's Polo hatch and sedan also lost 1,2% in share as the old models were on run out, but the model range still managed to edge ahead of the Toyota Tazz over the two six month periods under review. Tazz slipped to fourth, as the evergreen CitiGolf increased its volume and market share.

The Opel Corsa held fifth spot, ahead of the popular Mercedes-Benz C-Class (sales up 57%), with the BMW 3 Series slipping from sixth to seventh, and Renault's Mégane/Scénic ranges maintaining eighth position while the new Golf 5 overtook Ford's best-seller, the Fiesta, for ninth.

It is a pity we do not have the sales details for the Hyundai Getz - it is believed to be selling well in excess of 1 000 units a month, and so could well be in the industry top 10.

Nissan's best-seller, the X-Trail, is also the leader in the SUV market (1 714 units sold), having overtaken the Jeep Cherokee.(1 580 sales), with the Toyota Prado in third place (1 496 sales) , while the BMW X3 is proving a success in this market (1 403 sold). The Toyota RAV4 (1 077) is the leader among the smaller "soft roaders", well clear of its old rival the Land Rover Freelander (383), which has been suffering from image and reliability problems in recent times. It is in this market where one would be interested to see the sales figures for the individual SUV models in the AMH range as that is an area on which the group focuses.

Strangely the Toyota Prius hybrid did not record any sales in June and total sales from launch at the beginning of the year total 44. However, the fact that the car can now be purchased outright, instead of being available only on a long-term rental, could well change the picture going forward. On the other hand the Prius was in good company with no sales in June, as this was also the case for the much-vaunted, ultra-expensive Maybach, which has recorded only one Naamsa sale this year, despite the hoo-hah of them having been bought by several black businessmen.

The total commercial vehicle market has grown by 27% in the past year, from 69 255 units sold between January and June 2004 to 88 264 in the first six months of this year, reflecting the bullish economic climate. Light commercial vehicle sales rose 26%, while the burgeoning medium commercial market rose by 58%, with heavy trucks up 36% and extra-heavies rising almost 16%.

Toyota remained at the top of the LCV pile, despite losing 3,3% in share (going down from 30,4% to 27%) as the previous Hilux was run out and the Stallion panelvan discontinued.

General Motors, which seems to be enjoying a renaissance with its new Isuzu and Opel LCV models, jumped from fourth to second in the LCV market, overtaking Ford (down to third) and Nissan (now fourth on the table). DaimlerChrysler remained in fifth spot, losing 1,2% in share, with newcomers Accordian Investment going straight to sixth position with the Tata Telcoline.

The Hilux retained leadership among LCV models, despite dropping 4,6% in share as availability became a problem with the run out of the old model and production start up of the new range. The Isuzu overtook the Nissan Hardbody for runner-up spot, while the Ford Bantam almost doubled sales as it vaulted from eighth to fourth position.

The arrival of the new Hilux, at a very competitive price and with a five-year/90 000 km service plan, has certainly set the cat among the pigeons in the LCV market. First to react was GMSA, who trimmed prices by as much as 9,8% and included 5-year/100 000 km maintenance and service plans in the retail price of their recently launched Isuzu KB range. This move is sure to have elicited plenty of calls to the company's call center from irate owners who had bought their new Isuzu bakkies in the past few months!

Toyota's Hi-Ace bus continues to sell well, despite the range being cut to a single model with the launch of the Quantum range, and the impending threat of the taxi recapitalisation that will bring new players into a market still dominated by Toyota. In fact, sales of the Hi-Ace are running at record levels.

The McCarthy group, which until now has restricted its operations to retail dealerships, is now following the example of the Imperial Group by becoming a vehicle distributor too. They have recently launched the Russian-built GAZelle, aimed straight at the taxi market. Powered by a diesel engine, the GAZ is priced slightly higher than the Hi-Ace. The project is a joint venture with taxi group Santaco (SA National Taxi Council) and so far they have not reported sales to Naamsa.

It will be interesting to see what happens when the final taxi recap rules are finally announced.

The medium truck market is where all the action is in terms of segment growth, but it is an area where an interesting anomaly has arisen. The anomaly is the arrival of the giant Ford F250 pick-up truck, which falls into the MCV segment, although it is far removed from the forward control trucks that make up the bulk of this market. The Ford reported 223 units sold when reporting initial sales of this model to Naamsa in May. This was good enough for second in the segment behind the Toyota Dyna (229) and just ahead of the Tata (220). Although sales dropped back to 97 in June, the Ford will remain an interesting factor in the ongoing analysis of this sector of the market.

Dyna maintained MCV segment leadership, with sales up 43%, although share was down 1,9%. Newcomer Tata is already in second place, ahead of the DCSA pair of Mercedes-Benz Sprinter and Mitsubishi Canter, while Volkswagen, another company to have entered the MCV market recently, seems to have stalled, as its sales for the first half of 2005 were the same as for the first six months a year previously, despite the big growth in MCV sales. This equated to a drop of 2,2% in share.

Positions remained static among the four major players in the heavy truck market (8 501-16 500 kg), but the gaps between the four were small. Toyota (561 units sold), set the pace, followed by Nissan (541), Isuzu (539) and DCSA's Mercedes-Benz and Fuso offerings (445).

DaimlerChrysler continued to stamp their authority on the extra-heavy truck segment, with penetration up 4,8% to 33,8% on a sales volume increase of 35%. MAN slipped ahead of Tyco Trucks into second place, albeit with less than half the sales of segment leader DCSA, while Volvo dropped from third to fourth, with Nissan Diesel holding onto fifth position.

Tata has recently entered both the heavy and extra-heavy truck markets, and it will be interesting to see if they can emulate the success they are enjoying in the MCV market.

More truck news is that Volvo will move its truck plant from Botswana to Durban, where they are setting up a plant with a capacity of 1 600 units a year. They say they may also consider assembling the Mack truck range at this facility. Volvo has assembled truck kits in Botswana since 2000.

The bus market showed some growth in the first half of 2005, compared to the same period last year, with unit sales going up from 377 to 449. MAN retained its strong leadership position in this market, with a share of 44,8%, compared with 20% each for DCSA and Scania, while Volvo lost more than 10% in share in the period under review.

Looking ahead, the future looks very rosy for all members of the motor industry, with vehicle hire companies increasing their orders to cope with the booming business environment and the emerging market becoming an increasingly important factor in sales growth. Wesbank estimate the emerging market at 24% of their asset book, while they also see women as accounting for 34% of their book. Wesbank cited growth of 60% in total vehicle sales between June 2002 and June 2005 and project continuing growth going forward.

The growing demand for vehicles is also putting pressure on dealerships and there is a lot of activity on this front too, in terms of building new sites or upgrading and enlarging current facilities. DaimlerChrysler, for instance, says dealership development recently completed, under construction, or planned totalled between R1,8-bilion and R2-billion, with R300-milion invested already.

The "good times" are certainly rolling!