Passenger car sales in South Africa are softening in 2007 compared with the bumper market of 2006. There are many factors that have contributed to the slowdown, such as rising new vehicle prices caused by the weaker exchange rate and the ever-present threat of more interest rate hikes. What's more, the unexpectedly high car sales recorded during the last three years have obviously taken many buyers out of the market already.

The first quarter of 2007 ended with March car sales 2,4 per cent down on March of 2006, but still 1,8 per cent ahead on a year-to-year basis.

It seems likely that the slowdown will continue and the sales leader in the car market, Volkswagen, is reviewing its employment situation and not renewing the contracts of some of its fixed-term temporary workers. At the end of December 79 of those workers did not have their contracts renewed and it happened to a further 127 workers at the end of March, as the company saw "a slowdown in the domestic new vehicle market and some 'softness' in the export market."

Commercial vehicle sales, on the other hand, continue to increase as major infrastructural projects get underway - many linked to the 2010 soccer World Cup - and a wide variety of businesses expand their operations … including many of those in the local retail motor industry!.

On a year-on-year basis sales for the first quarter of 2007 for light commercials, medium commercials and heavy commercials were up 14,8-, 10,6- and 29,8 per cent respectively. (The total truck market - mediums, heavies and extra heavies - amounted to a record 3 239 units in March, which was a 21,5 per cent increase on March 2006 and the biggest single month truck market in history).

Toyota, now with much freer supply of its Hilux pick-ups and Fortuner SUVs continued its market dominance that has now been unbroken since 1980. Toyota's sales in the first quarter totalled 39 106 units, ending with a record-breaking 14 135 vehicles sold in March - making the Prospecton-based manufacturer the first company to breach the 14 000 mark. The total was 8,8 per cent higher than the 35 927 units retailed a year earlier and equated to a 23,2 per cent share of the overall market.

Volkswagen closed slightly on the leader by selling 27 935 units for a 17,2 per cent of the market - an improvement of 1,5 per cent on the position at the end of March last year and the biggest increase by any manufacturer for the quarter.

There was a change in third and fourth positions, with General Motors SA overtaking Ford, but it was a close run thing, as only 45 units separated GMSA and FMCSA. At the same stage last year, Ford was 671 units ahead of GM. Positions five (DaimlerChrysler), six (Nissan) and seven (BMW) remained static, although all three lost market share by 0,6-, 0,1- and 0,8 per cent respectively.

There was a change of position at the lower end of the top 10 table, with Tata moving ahead of Renault for eighth place, while the French company lost almost half its sales volume (4 739 units down to 2 560 in a year) and slumped to 11th position. Honda is one of the companies on the march after regrouping as a stand-alone company five years ago. Honda's sales for the quarter jumped by 65 per cent in the quarter - off a relatively low base, but impressive enough because the company has no commercial vehicles in its local range.

The non-reporters continued to show strong growth, with quarterly sales moving up 14 per cent from 15 749 units to 18 028 units. However, it was reported in the annual report of the Imperial Motor Group that Associated Motor Holdings (AMH), which handles those brands, was under financial pressure due to the unfavourable exchange rate movement

Although industry commentators have grown to live - albeit unhappily - with AMH's insistence in breaking down their sales into model types instead of by model name and type, matters are likely to get worse. The reason is the rolling tide of Chinese imports that are already arriving on our shores. Chana and Super Group's Firmaco is reporting, but one wonders how many of the other importers from China will provide Naamsa with their detailed sales statistics. One hopes so, as our sales figures are becoming increasingly skewed as AMH sales increase and more potential non-reporters join the market.

DaimlerChrysler held onto third place despite the run-out phase of its top seller, the Mercedes-Benz C-Class, and that was no doubt the reason that the company's market share shrunk to 10,4% per cent. Ford, although holding onto fourth spot, was another company to suffer a decline in market share, dropping to 9,5 per cent. General Motors, with the addition of luxury brand Cadillac to its line-up, continued to move forward, improving penetration to 7,9 per cent and overtaking BMW in the process. (BMW lost 0,9 per cent in share to go down to 7,7 per cent and ended the quarter 262 units behind GMSA in the sales tally).

Honda jumped up to seventh from ninth, but Renault dropped its market share by 2 per cent as it slumped to a penetration of 2,4 per cent and unit sales almost halved. It now seems highly likely that the low cost Renault Logan will be coming to South Africa, replacing Fiat on the assembly lines of Nissan South Africa and the local Renault executives must be hoping that this addition to their model range arrives sooner rather than later to stop their downward slide.

Peugeot is also in reverse gear. The company, celebrating the fifth year of its return to South Africa, has retained 10th place on the top 10 table, but has lost a further 0,3 per cent in share. Despite an increased model range, Peugeot's unit sales for the quarter were down 14 per cent on the position a year ago,
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It seems as though Toyota has lost its stranglehold on the title "Manufacturer of the nation's favourite car". Corolla first took this position in 1982, and since then it has hardly been headed. Now, despite lumping Corolla, RunX hatchback and the Verso MPV together as one model range for the past few years it is the VW Polo and Polo Classic that are on top of South Africa's popularity stakes.

At the end of last year the Corolla piped Polo by a scant 267 units, but at the end of the first quarter the Polo was already 796 units ahead. Admittedly, Corolla and RunX are entering the twilight of their lives - new Auris models will début in the last quarter of 2007 and there is obviously cannibalisation by Yaris hatch and saloon at the lower end of the Corolla/RunX ranges. Can Toyota make up the shortfall on Polo in the run-in to the end of the year? The marque usually sells big volumes when new models are introduced….

Both Toyota and VW have strong back-ups in the top-seller stakes, with Toyota's Yaris now South Africa's third favourite model range, 815 units ahead of the evergreen VW CitiGolf. BMW 3-Series holds on to third, ahead of the C-Class Mercedes-Benz, VW Golf/Jetta, Opel Corsa, Ford Fiesta and - a newcomer to the top 10 - the Nissan Tiida.

Although eclipsed by arch-rival Honda CR-V, Toyota's RAV4 is holding up surprisingly well with 495 units sold in the first quarter, compared with 497 a year ago when a model change was taking place and the less expensive 1,8-litre two-wheel drive models were dropped from the range.

A strange phenomenon in the SUV market is the VW Touareg. Despite a very comprehensive model range, and a big marketing push, Volkswagen's large SUV is battling to find buyers and was outsold by the related, but much more expensive, Audi Q7, with first quarter sales of 78 and 326 units respectively! That certainly says something about the value of a badge, with Audi obviously seen as having a much better image than the similar VW product!

Ford, in third place, had meanwhile improved in both share (up to 19,6 per cent) and volume (up 15 per cent). The positions from fourth to eighth remained static, although four of the five companies showed a drop in market share - Nissan (by 1,7 per cent), DaimlerChrysler (1,3%), Tata (down 0,2%), Volkswagen (0,6%) and Fiat Auto (down 0,3%).

Interestingly, Chana came from not being on the market a year ago to ninth place, with 901 units sold, for a 1,8% share, which was well ahead of the other players in this market - Renault (86 units), Peugeot (44) and GAZSA (2).

The Hilux was the runaway winner in the Top 10 LCV rankings for the first quarter of 2007, with an 18 per cent market share - 3,4 per cent up on the situation a year ago. Hilux sales for the quarter totalled 9 082 units - 41 per cent more volume than a year ago - with the cherry on the top being the fact that sales in March (3 671 units) made Hilux the best seller of all vehicles for the month - a position usually held by a passenger car.

The Opel Corsa Utility held onto second spot, despite growth of only 9 per cent in volume and a slip of 0,5 per cent to a 11,6 per cent share. Chasing hard was the Ford Bantam which was only 372 units behind the Corsa, as its share grew by 1,5 per cent and it jumped from fifth at the end of March last year to third position this year, ousting the Isuzu KB - fourth with a drop of 2,1 per cent in share - and Nissan Hardbody - fifth with a drop of 2,5 per cent in penetration.

The sixth placed Ford Ranger and seventh-placed Toyota Siyaya held their positions, although both lost share. Amazingly, the Nissan half-tonner, which is nearing the end of its production run in South Africa, jumped up from ninth to eighth, thereby passing the Mitsubishi Colt, which has now dropped to 10th behind the Toyota Quantum. The Nissan Navara, which had been in 10th spot at the end of the first three months of 2006, has now moved down to 11th.

Nissan is due to shed about 400 workers due to the ending of the Fiat assembly contract and the run out of the Nissan B140 bakkie because of emissions control legislation (the model still uses a carburettor). The restructuring at Nissan could affect 300 assembly plant workers and 100 white collar employees.

Tata have dropped in both sales volume (613 sales down to 591) and share (down 2,6%) and are now in third place, followed by Nissan with its Cabstar range, which saw a drop of 0,4 per cent in share. GMSA's Isuzu brand has moved up from sixth to fifth, leapfrogging Ford's F250 range.

Iveco has jumped up from ninth to sixth, passing GAZ and Volkswagen. GAZ, with its taxis coming under heavy criticism in the media, is now down to 10th, while VW had no stock to sell in the first quarter, moving only three units while waiting for the arrival of its new 'Benz Sprinter-based Crafter range in April.

The pecking order in the HCV segment has remained static over the past year, although GMSA (up1,9 per cent), Toyota (up 1,3 per cent), DaimlerChrysler (up 1,2 per cent), Tata (up 1 per cent) and Iveco (up 0,2 per cent) all showed gains in share at the expense of MAN, Nissan Diesel and Tyco Trucks.

The extra heavy segment, where the real volume lies, remains the preserve of DaimlerChrysler, with its Mercedes-Benz, Mitsubishi and Freightliner ranges, even though the long-time market leader shed 1,7 per cent in share to 28 per cent. MAN moved from third to second, although its unit sales (382 units for the quarter) was way behind the 846 trucks retailed by DCSA. Tyco, which had been in second spot, lost 5,8 per cent in share to 11,4 per cent and third place.

Tata improved from fifth to fourth at the expense of Nissan Diesel, while Volvo replaced Scania in sixth position.