The South African vehicle industry ended 2005 on an all-time high and corks could be heard popping from sparkling wine bottles all over the country when the consolidated sales results were announced in early January. But one market segment record – annual truck sales - remains intact.

Total new vehicle sales reported to the National Association of Automobile Manufacturers of South Africa (Naamsa) rocketed by 25,7 per cent above the 2004 figure to a record level of 565 018 units. This compares very favourably with the 449 594 vehicles retailed the previous year. Add in 52 432 units (43 023 cars and 9 409 LCVs) sold by the Imperial Group’s Associated Motor Holdings (AMH), which do not report detailed sales figures to Naamsa, and you end up with a staggering total market of 617 450 new vehicles.

However, what is interesting is that it has taken 24 years to set a new Naamsa record, as the previous record of 453 555 units was set in 1981, at the height of sanctions against apartheid and a “closed” economy. At that time some of the members of the local motor industry were limited in the supply of CKD kits, while imports were very limited, with duties of more than 100 per cent in force. This means virtually all the vehicles sold in 1981 were made in South Africa with a high percentage of local content. An amazing achievement for that time in history and the lack of infrastructure and logistical aids under which the motor industry operated!

As mentioned earlier, one record that was established in those far off days still stands. Amazingly this is the one for trucks. One would not think so when traveling long distances these days – especially on the Johannesburg-Cape Town route!

Sales in this segment in 1981 totaled 26 896 units, compared to 26 379 trucks sold in 2005. (The latter figure for last year is made up of 12 249 mediums, 5 177 heavies and 8 953 extra-heavies).

An excellent indicator of the buoyancy of the South African economy – and especially the automotive industry - is that the year ended on a real high. December sales were at a record level of 45 814 units, which was an improvement of 28,2 per cent over the same month in 2004.

In the “old days” many people shied away from buying a new vehicle in the last couple of months of a year as they wanted a “next year’s model”. Judging by the number of new vehicles driving around with white, cardboard temporary permit plates on them during the holiday season (many of which had expired!) it seems the licencing authorities were destined to be inundated with registrations in January!

General business confidence, continued low interest rates, less expensive and innovative vehicle finance plans as well as a myriad of marketing “push” programmes continued to bring both corporate and private buyers into the market in 2005. Sales of passenger cars were up 25,2 per cent, light commercials by 25,9 per cent, medium commercials by a staggering 41,8 per cent, heavy trucks and buses by 24,5 per cent.

It certainly was a wonderful year for an industry that has been waiting a long time for the good times to start rolling after the democratic process took control of the country in 1994 and hopes rose in expectation of a boom in all aspects of business. In the interim many new vehicle brands and hundreds of additional models have come to South Africa, with everybody waiting to benefit from the expected boom. Now it seems their faith has been rewarded, particularly as industry commentators and economists predict the good times will continue into the future.

The profile of vehicle buyers in South Africa has changed dramatically over the past few years. Research into the latest sales figures shows that young people represent one of the fastest growing groups of customers. Over the last couple of years, growth of as much as 80 per cent has been noticed in the age group 18 – 24 years.

A big increase in black spending power is already very evident and is expected to accelerate in the future. Wesbank says its emerging market “book” has grown by 900 per cent since 1994 and has achieved a compound growth rate of 33 per cent annually since 2001.

In fact, it seems that South Africa was one of the best – if not thebest – performing vehicle market in the world in 2005, with significant growth in production and sales – both activities hitting new all-time highs - while exports showed a strong recovery and reached record levels.

The combination of higher production output for both the domestic and export markets resulted in total domestic production for 2005 amounting to approximately 530 000 vehicles. This compares to a total production figure of 455 052 units in 2004 – an improvement of 16,5 per cent.

Encouragingly productivity and job creation is also on the rise in the automotive sector, according to Naamsa’s annual report. Productivity in the vehicle manufacturing industry has improved considerably from 10,2 vehicles produced per year per worker in 1999 to 14,4 vehicles per year per worker in 2004.

Employment levels in the vehicle manufacturing sector have increased substantially from the middle of last year to the end of September 2005 and the number of employees employed directly in manufacturing totaled 34 604, which was the highest employment level for the industry in the past seven years.

The industry’s domestic revenue, including VAT, rose to R76,4-billion in 2004, compared to R59,4-bilion in 2003, mainly due to the rise in sales volume. This trend most certainly continued in 2005. New vehicle prices continued to remain stable, with year-on-year increases coming in below 1 per cent.

Imported cars and light commercial vehicles continue to be a bigger and bigger factor in total vehicle sales, increasing to 28,3 per cent in 2004, compared with 22 per cent in 2003. The imports share is sure to be far greater in 2005. In the 10 years since 1995 consumers’ choice has grown from 250 model variants to more than 1 100 models. However, the industry’s negative trade balance had widened to 18,8 per cent from 9,1 per cent in 2003, due primarily to the strong rand that made imports more cost competitive, and had a negative effect on the export of built-up vehicles and components.

It seems a major contributing factor is a production constraint at the company's Durban plant as a huge new paint facility is erected. This shortage of painting capacity evidently limited the output of locally built models such as the Corolla, RunX, Tazz and new Hilux, because the plant still had export commitments to meet. The new paint shop is not expected to be operational much before the last quarter of 2006, so one can expect the other competitors to continue to make headway while Toyota waits for its situation to improve.

In the interim Toyota became a major importer of built up vehicles, most notably bringing the new Yaris to market two months before it was launched in Europe. This newcomer, imported from Japan, surprised many people with its instant acceptance in a market where Toyota had not been represented previously. Yaris sales totaled 4 425 in November and December.

In addition, one can see from analysing the 2005 sales figures that Toyota boosted the sale of other imports such as RAV4 (now on run-out) and Corolla Verso with keen incentive programmes to make up for the shortfall in the availability of local models.

However, even at a 22,2 per cent market share Toyota remains the dominant player in South Africa. The company sold a national record total of 125 695 units (up from 113 534 in 2004) compared to 94 408 (16,7 per cent share) for runner-up Volkswagen, which improved penetration slightly from 16,1 per cent in 2004. A notable achievement for VW in 2005 was manufacturing more than 100 000 units in a year for the first time, previously a feat achieved only by Toyota in South Africa.

The battle for supremacy between these long-time rivals is expected to get even more heated in 2006. Volkswagen regained top position in the passenger car market from Toyota in 2005 and now wants to strengthen this leadership position in this high profile segment of the market.

Toyota has stated that it will launch more new or revised models in 2006 than in any previous year in the company's 45-year history, while VW recently launched a one-ton pick-up range and is adding big buses and heavy trucks to its armoury. VWSA is also is rumoured to be introducing a third passenger car brand to the local market. This is expected to be SEAT, from Spain, which will, evidently, be a stand-alone brand with its own dealers and a "sporty image."

There was a change in third position in total vehicle sales, with the revitalised General Motors SA overtaking Ford. In 2004 Ford had been 2 498 units ahead of traditional rival GMSA, but this year "The General" retailed 76 592 units (almost 40 per cent up on its performance the previous year) to turn the tables and finish 2 767 units ahead of Ford.

DaimlerChrysler held onto third place, despite a small decrease in market share (down 0,4 per cent to 9,4 per cent) and is now bringing another brand name back to South Africa in an attempt to boost its share of the passenger car market. The brand is Dodge which faded from the local market ignominiously with its name attached to the Dodge Avenger, a South African amalgam of components from many parts of the world and a failure on the sales front. Now we have to see what impact the new macho-looking Dodge Caliber will have on the local market.

Sixth, seventh and eighth positions on the ranking list also remained unchanged, in the order Nissan (market share down 1,3 per cent to 7,7 per cent), BMW (share up 0,5 per cent to 5,1 per cent) and Renault (share up 0,2 per cent on the back of a 35 per cent rise in sales volume).

Peugeot and Fiat Auto swapped places for the bottom two positions on the top 10 list, with Peugeot going up to ninth, despite a small drop in share of 0,2 per cent. Fiat Auto, which includes Alfa Romeo, fared even worse, despite the addition of several new and revised models. They went down from 1,8 per cent to 1,4 per cent and are hoping to revive their fortunes through a collaborative tie-up with Fiat Brazil, which is a major player in its domestic market.

However, to see a real increase in sales and market share one has to go to Associated Motor Holdings and look at their sales figures, which are not reported to Naamsa. As mentioned previously, AMH retailed 52 432 units in 2005, which was a whopping 67,6 per cent improvement on sales the previous year, when they sold 31 276 units. This equates to AMH moving their share of the total market (including their non-reported figures) from 6,5 per cent in 2004 to 8,5 per cent last year.

It must also be remembered that the Imperial Group does not only have AMH selling vehicles on their behalf, but also owns the Tyco heavy truck group and has significant shares in Renault and Tata, who all do report their sales to Naamsa. This makes them an even bigger player on the local market.

This AMH success story, over only a few years, is something that is now very much in the forefront as Naamsa members plan their future product and pricing strategies.

In contrast to the total market picture, where they were passed by General Motors, Ford moved up from fourth to third place in terms of passenger car sales, leapfrogging DaimlerChrysler. GMSA and BMW held on to their fifth and sixth spots respectively, but Renault overtook its global partner, Nissan, for seventh position.

Peugeot moved up from 10th to ninth position, at the expense of Fiat Auto, which also lost ground to Honda, who took 10th spot, with Fiat in 11th. Honda bumped up sales by more than 50 per cent in 2005 and with a raft of new models launching in 2006 they are sure to make more ground, particularly as their new offerings fare well in global "car-of-the-year"-type competitions and customer satisfaction surveys.

However, when it comes to sales of individual model ranges it is the Toyota Corolla/RunX/Verso family that still rules the roost in South Africa, despite shedding 1,2 per cent in market share in 2005. Sales of 39 284 units were well ahead of the 32 781 Polos and Polo Classics sold by Volkswagen.

A surprising third place went to the evergreen VW CitiGolf, swopping places with the Toyota Tazz. The Opel Corsa range held onto fifth spot, despite a small drop in share. The Mercedes-Benz C class retained sixth position, ahead of arch-rival BMW 3-Series, while the Ford Fiesta jumped into the top 10 in eighth spot, overtaking the Renault Megane/Scenic range. Tenth position went to the Golf A5, at the expense of the Audi A4.

The Nissan X-Trail continued to set the pace in the SUV market, with 3 383 units sold, while the Toyota RAV4, in its model run-out year, surprised many people by racking up 2 846 sales to take runner-up position. Jeep Cherokee (2 651) pipped the Toyota Prado by two units for third place in this prestigious market.

Top seller in the two-seater market was the newcomer from GMSA, the Opel Tigra (345 sales), with the Nissan 350Z (303 sales) in second spot.

There were big changes in the ranking order below the segment leader though, with GMSA jumping from fourth into second place with a 5,1 per cent improvement in market share, while Ford, which was second in 2004, slipped to third with a share drop of 1,1 per cent. Nissan, which was third in 2004 moved down to fourth, ahead of DaimlerChrysler. However, the player to be watched is Accordian Investments (Tata), which joined the fray in 2004 and sold 190 units. A year later Tata reported LCV sales of 3 625 units, putting it into sixth position, ahead of many established brands.

The Toyota Hilux lost a substantial 3,9 per cent share of the LCV market, due to lack of supply, but still remained top of the heap with a 17,2 per cent share. GMSA's Isuzu KB took advantage of the Hilux supply constraint and moved into second place, ousting the Nissan Hardbody, which slumped to fourth, behind the Opel Corsa Utility - leader in the half-ton category. The Corsa's close rival, the Bantam, was fifth, underlining the strength of the half-ton segment.

Fiat's Strada is another new contender in this important small pick-up category, but it seems to be battling for acceptance in South Africa, like most of the Fiat and Alfa Romeo models, with monthly sales less than 10 per cent those of the Corsa Utility or Bantam.

Now there is another newcomer in the half-ton battle - the Proton Arena. The Proton car and LCV range is sold mainly by the dealers that previously handled the lame duck MG Rover franchise. Now it seems these dealers could face another crisis following Volkswagen AG's rejection of Proton as a joint venture partner. This has resulted in question marks about the future viability of the government-backed Malaysian vehicle maker. Only time will tell, but in the meantime it is yet another brand fighting for sales in the overtraded South African vehicle market. Unfortunately Proton is in the AMH stable and its sales are not reported, so we will not be able to see how the Arena bakkie fares in the half-ton battle.

Volkswagen's return to the one-ton pick-up market with a Transporter derivative was not very auspicious in terms of unit sales - 16 in November and 14 in December - but it still came out top in a recent bakkie survey by a local motoring magazine. Only time will tell if the "Bakkie of the Year" accolade is deserved!

Toyota has hit the target with another winner in the panel van category. The imported Quantum, which is the successor to the long-running Hi-Ace Van, has performed far better than expected and is already the country's most popular van.

The Dyna held onto its top spot with 2 817 units sold, but slipped 3 per cent in its share of this segment to 23 per cent. Tata, on the other hand moved up by 7,4 per cent from 12,4 per cent in 2004 (1 069 units sold) to 19,7 per cent on the back of a 226 per cent increase in sales to 2 417 units - only 400 behind the Dyna.

This strong performance by Tata has pulled it well ahead of DaimlerChrysler (Mercedes-Benz Sprinter and Mitsubishi Fuso), who are now third in the market, with Nissan going down to fourth. GMSA remained in fifth position with its Isuzu range, while Volkswagen moved from seventh to sixth with its Mercedes-Benz-Sprinter-based medium commercials. Ford, which has been out of this market for a while, jumped into seventh position on the back of sales of its "mega-bakkie", the Ford F250.

Nissan Diesel moved up from sixth to fourth spot during the year under review, displacing Volvo and Scania went backwards from fifth to sixth, ahead of Toyota's Hino offerings. However, the danger signals were again clear for the established players in this premium end of the truck market. Tata, which only entered this market segment in 2005, sold 351 extra heavy trucks and will be a tough contender in 2006.

There are also some commentators who say that the current vehicle sales boom is unsustainable at the current growth rate. Only time will tell who is correct.

Looking ahead in 2006 we see there is a positive attitude regarding further growth in vehicle sales, with an increase of at least 10 per cent expected for the current year, compared with 2005. Black purchasing power is expected to accelerate even further, while high levels of consumer and business confidence will also underpin new vehicle.

Unfortunately there are forecasts of an ongoing drop in used car values because the prices of new cars have not increased much in real terms for about three years, putting extra pressure on traders in the used car market. One industry executive says that a new car can lose as much as 36 per cent of its value in one year!

But let's rather end on a positive note and think of the huge benefits many new motorists are enjoying with the mobility of a motor car and the growing number of people employed by the booming industry.