The South African new vehicle market had its best year ever in 2006, breaking the 700 000 unit mark for the first time, with the charge being led by the commercial segments.

A total of 714 340 sales, including those by importers and distributors that do not report detailed sales figures to the National Association of Automobile Manufacturers of South Africa (Naamsa), was recorded through 2007. With importers Associated Motor Holdings (AMH) doing well on all fronts, this is the first time that annual sales have broken through the 700 000 barrier.

The 2006 figure was also an impressive 15,7 per cent up on 2005. Such a big increase was not expected at the beginning of 2006, following year-on-year sales growth of 26,2 per cent and 28,5 per cent in 2004 and 2005 respectively.

It is amazing to think that vehicle sales in South Africa have virtually doubled in the five years since 2002, when only 360 248 vehicles were retailed. The strong performance in 2006 means that South Africa was again one of the top-performing vehicle markets in the world for the year.

As expected, 2006 ended on a high note with total December sales setting a new record. It is interesting that the old philosophy of waiting until January for the new model year before buying a new vehicle is a thing of the past for most people. When buyers' minds are made up, they want their new cars now!

OVERALL MARKET
Reverting to Naamsa reported sales only, we see a 14,4 per cent growth in total sales over 2005 (646 581 versus 564 974 units). The best performing segments were again the commercials, with heavy trucks and buses leading the way on growth at 24,2 per cent. Next best were the medium trucks on 16,4 per cent, followed closely by LCVs on 16,1 per cent, while passenger cars came in at 13,3 per cent.

The sale of new vehicles by AMH that are not reported in detail through Naamsa added 67 759 units to the total, which amounted to a massive increase of 29,3 per cent over the previous year for this successful company, and underlines the growing acceptance of new nameplates by South African motorists.

Using the data from Naamsa reporters only, Toyota (including Lexus and Hino) has become the first company to sell more than 150 000 vehicles in a calendar year. Its total of 151 055 units has resulted in total market share moving up 1,2 per cent from 22,2 to 23,4 per cent.

The next eight companies on the sales ranking list retained their 2005 positions. Volkswagen was second (125 695 - share up 0,5 per cent), followed by General Motors SA (87 121 - down 0,1 per cent), Ford Motor Company (79 925 - down 0,7 per cent), Daimler Chrysler (53 289 - down 1,1 per cent), Nissan (51 149 - up 0,2 per cent), BMW (29 781 - down 0,5 per cent), Renault (15 574 - down 1 per cent) and Accordian Investments (Tata), which sold 14 883 units in 2006 for an increase of 0,4 per cent in market share.

Peugeot lost tenth place to Honda in 2006, but Honda in turn was only 129 units ahead of Fiat Auto.

PASSENGER CARS
Passenger car sales benefited from substantial purchases by the car rental industry in 2006, with an estimated 50 000 vehicles going into this market. At the same time, imported passenger cars continued their rapid growth and now account for about half of the car market, compared to about 16 per cent only eight years ago.

Not surprisingly, the top performing segments were in the entry level and small car markets. These cars made up about 40 per cent of the total car market, while the sales of diesel cars continued to grow.

Toyota made the biggest jump in market share of any company in the passenger car market, but its improvement of 3,5 per cent was still not enough to overtake Volkswagen for top spot in this high profile segment.

Volkswagen sold a record 106 113 cars in the year, becoming the first company to retail more than 100 000 cars in this period. They ended the year 3 836 units ahead of Toyota, which had led the segment in the closing months of 2006. VW's share was up by 0,7 per cent to 24,9 per cent, but this feat was scarcely aided by the addition of Seat to the line-up. The Spanish nameplate sold 683 units in 2006.

However, there were some changes in the rankings beneath these two arch rivals. Although Ford held on to third spot, GMSA (with the help of its strong-selling Chevrolets) took fourth place away from DaimlerChrysler. The BMW Group remained in sixth spot, while Nissan passed Renault to take seventh.

Honda came from outside the 2005 top 10 to take ninth spot, while Tata held tenth. Peugeot slipped out of the major rankings into 11th.

The fight between Volkswagen and Toyota for individual model range honours was just as fierce. In the end, Toyota claimed the top spot with its Corolla saloon/RunX/Verso with 41 420 units sold, only 267 units ahead of the VW Polo saloon and hatchback duo.

Toyota's Yaris saloon and hatchback performed impressively in its first full year on the local market, selling 31 354 units for third position on the table. Incidentally, Yaris was the top selling range in the country for the first time in December.

The long-in-the-tooth CitiGolf, which has had a multitude of upgrades since its launch in 1974, was the fourth most popular car in South Africa through 2006. Though undoubtedly aided by strong rental company sales, the impressive total of 28 550 units for the year (averaging almost 2 400 per month) is a "wake-up call" to this car's detractors. It is the only remaining member of the "extended life" entry level cars that played such a big part in satisfying the lower end of the market for the last 10 years or more.

One of these so-called "dinosaurs" is rising up from the ashes again in the form of the Fiat Uno. This time imported from Brazil, it will be interesting to see how it fares on the sales front after its long period of absence.

The only other model ranges to sell more than 10 000 units in our fragmented market in 2006 were the BMW 3 Series, Mercedes-Benz C-Class, the "recently deceased" Toyota Tazz, Volkswagen Golf/Jetta and the Ford Fiesta.

Toyota's Fortuner was another success story in the SUV segment. Launched early in 2006, Fortuner sales for 2006 amounted to 5 042 units, way ahead of the previous SUV market leader, Nissan's X-Trail (3 219 sold). It seems as though Fortuner's success is affecting the Prado, which is now fourth on the SUV list, behind the Land Rover Discovery 3. Toyota's RAV4 is in fifth spot, less than 100 units shy of the Prado.

The SUV market is one where the importers are very strong, so it is disappointing that we cannot compare their sales with the Naamsa reporters in this highly competitive segment.

LIGHT COMMERCIALS
The big news in the light commercial vehicle market is that Toyota has been toppled from its perch after many years. General Motors SA is the new pacesetter, selling 46 279 units to Toyota's 44 002.

The "General" bumped up its share by 0,9 per cent, while Toyota slumped by a massive 3,8 per cent largely due to its lack of a half-ton pickup and the discontinuation of the Stallion and Carri panelvans in recent months.

An interesting newcomer to the LCV sales listings is the first Chinese LCV - Chana - on sale here. Chana sold 207 units in December, which was ahead of Mahindra (156) and not far off Fiat Auto (274) and DaimlerChrysler (289). The progress of the Chinese is sure to be the focal point for many industry analysts in 2007.

Toyota's Hilux managed to hang onto its leadership in the LCV individual model ranges despite constraints in supply as the company's new paintshop was being built. Hilux's market share dropped by a whopping 3,8 per cent, but its total of 24 967 was still 1 492 units ahead of the half-ton Opel Corsa Utility, with the Isuzu KB a further 1 345 behind.

Ford's Bantam half-tonner came out a surprising fourth in this market, pipping the long-established Nissan Hardbody range by 10 units. However, adding sales of the Hardbody and the leisure-oriented Navara together gives Nissan a total of 23 435 one-ton bakkies.

Toyota dominates the commercial minibus market with the Siyaya taxi (10 667 units sold), while the company's Quantum bus and panel vans are also strong sellers (4 959), with many of the buses already doing duty as taxis.

MEDIUM TRUCKS
Toyota's Dyna, despite shedding 2,9 per cent in market share (down to 18,3 per cent), still managed to hang onto top spot in the medium truck market. But it was a close run thing, with only 252 units between them and their challengers, Tata. This is compared with a gap of 406 units a year previously.

Mercedes-Benz's Sprinter retained third position, with Nissan and GMSA (Isuzu) staying in fourth and fifth spots respectively. This is one market that will come under threat from the Chinese imports, so it will be interesting to look at the medium truck table in a year's time.

HEAVY TRUCKS AND BUSES
The heavy truck market (8 501 - 16 500 kg) was another segment where Toyota Trucks lost share, but remained at the top of the pile. Hino trucks sold 1 509 units (share down 1,1 per cent to 22,5 per cent) to stay ahead of long-time rivals Nissan Diesel (1 356), with Tata jumping from fifth in 2005 to third in 2006 (1 171 units sold). Tata thereby ousted one of the "establishment" in GMSA's Isuzu range, with Mercedes-Benz in fifth position.

The status quo reigned at the top end of the extra heavy category (16 500 kg and up), with Mercedes-Benz in top spot. Despite losing 3,5 per cent in share, Mercedes-Benz still stayed well ahead of MAN and Nissan Diesel. This is another segment where Tata is making its presence felt, with sales more than doubling in the period under review (351 units in 2005 to 886 in 2006).

MAN remained the dominant player in the bus market over 8 501 kg despite losing a staggering 7,4 per cent in share (down to 35,2 per cent), while arch-rival Mercedes-Benz jumped its penetration by a stunning 9,4 per cent to 28,4 per cent of the total market of 1 248 units to overtake Scania for the runner-up spot. The Indian manufacturers are not into the bus market yet, but it is probably only a matter of time. VW will launch its long awaited heavy truck and bus ranges into the market this year.

LOOKING AHEAD
There is general consensus that sales will continue to rise in 2007, albeit at a far slower rate than 2007. While competition will increase further as Chinese vehicles arrive on our shores in increasing numbers, though at this stage it seems they will be mainly commercial-type vehicles.

Currently the suggested rate of sales growth is being predicted in the vicinity of four to eight per cent. Production is expected to increase by 11 per cent over 2006 with a projected 682 000 vehicles being manufactured in South Africa in 2007. This is compared with the 614 000 produced last year, of which more than 200 000 were exported.

The key determinants of the industry's 2007 performance, in terms of domestic new vehicle sales, include the future direction of interest rates and new vehicle pricing, which is a function of the rand-euro and rand-yen exchange rates. Indicators are that more interest rate hikes can be expected in the short to medium term, while local producers are under serious cost pressures with the high level of consumer price inflation, currently running at 10 per cent a year, and rising material prices - especially steel.

On the positive side, the country has enjoyed 31 consecutive quarters of GDP growth - the longest on record - that will be an important factor in the commercial vehicle market, as many infrastructural projects will be undertaken in 2007.

Some industry commentators are already seeing 2007 as a "buyers market" stimulated by a host of new model introductions and the arrival of even more vehicle distributors in the already overcrowded South African vehicle market. This will put the pressure on manufacturers and distributors, who will be under intense competition in the market place.

As we usually say at this time of the year: "Only time will tell!"