Motor industry pundits and senior executives in the local motor industry proved over-optimistic in their forecasts of vehicle sales in South Africa in 2007.

The market slumped in the last quarter of 2007 and in the end, total sales of those companies reporting sales through NAAMSA and sales by Associated Motor Holdings, which does not give a detailed breakdown of its sales, amounted to 878 097 units last year. That was a 5,4 per cent decline compared with the record-breaking total of 714 316 units sold in 2006 and the first time that the annual sales aggregate had decreased since 2002.

The general consensus at the end of 2006 was that 2007 would be a year of slower growth and "consolidation", but nobody predicted a fall in sales, after rises of 26,1 per cent in 2004, 28,5 per cent in 2005 and 15,7 per cent in 2005.

Two sales forecasts for 2007 by industry executives underline the optimism at the end of 2006. One predicted a rise of 7,9 per cent in overall sales to 771 000 and the other said he believed sales would total 768 000 units - growth of 7,5 per cent.

However, although the overall sales total in 2007 was down, the only segment to shrink was the high-profile passenger car market, with light commercial vehicles (LCVs) and medium commercial vehicles (MCVs) showing modest growth of 2,4 per cent and 6,5 per cent respectively.

It should be noted that although there was little growth in the LCV market it was the first time that the segment had sold more than 200 000 units in a year - an outstanding performance when one considers that sales of LCVs in 1999 were less than 100 000.

The heavy and extra-heavy truck markets continued to steam ahead, with sales of 21 901 units, which equated to growth of 16,3 per cent from record sales of 18 834 sales in 2006, as infrastructural projects continued apace. The sales in 2006 had marked the first time this segment had exceeded 18 000 unit sales in a year and it broke an industry segment sales record that had stood since 1981!

There were many contributing factors to the slide in this important economic indicator:

• Oil rose from $50 to $100 a barrel.
• Household debt, as a percentage of disposable income, rose to 77,4 per cent (up from 50 per cent in 2004).
• Prime lending rate rose from 12,5 per cent to 14,5 per cent in 2007.
• The introduction of the National Credit Act (NCA) in June impacted mainly on the passenger car market, with the financing approval rate dropping from the usual 55-60 per cent to only 20 per cent in the first month. The approval rate is almost back up to the previous levels, but it is estimated that about 20 per cent less people are applying for finance as they don’t believe they will qualify under the stringent new regulations.
• Domestic inflation continues to grow.
• Decline in consumer and business confidence.
• The revisions to e-NaTIS slowed vehicle registrations for a couple of months.
• Trade in prices were lower due to an over-supply of used cars and many dealers made “special offers” on new cars that were very attractive and little higher than a late model used car.
• Affordability suffered as regular price increases – small at this stage – became a regular feature of the industry

Another factor that played a role in lowering sales was the arrival of more Chinese vehicles. The majority of companies that distribute those products took some sales from existing brands, but don't report sales to NAAMSA. These include Asia Wing, FAW, CAM, Geely, GWM, Soyat and GoNow, with McCarthy reporting sales of their Foton and Meiya ranges, Chana with their line-up of mini-LCVs and GoNow says that it will report from January 1. It is estimated that non-reported Chinese imports amounted to about 10 000 units last year.

In addition, some companies did not report all the vehicles they sold in December as customers preferred to hold over the licensing process to 2008. This seems to have been the case with Mercedes-Benz SA because they reported only 1 594 sales in December, which was 40 per cent of the 3 947 units delivered the month previously. BMW were also way down at 1 019 sales for December after retailing 1 879 units in November. Chana, Fiat, Honda, Mahindra, Peugeot and Tata were other companies that had "thin" December sales.

However, the situation is usually balanced by higher numbers reported in January and has little impact on the overall industry performance each year.

The lower sales in 2007 seem to have given the industry a wake up call after the buoyant period it has enjoyed since 2004. Generally it seems that sales predictions for 2008 are indicating a further drop in sales this year...

OVERALL MARKET

Toyota continued its dominance of the overall local vehicle market in 2007. It rounded off an excellent sales year by retailing 13 720 units - and exporting another 7 409 - in December to complete its 28th consecutive year of overall leadership of the South African vehicle market. In doing so, it increased market share to 23 per cent, which was 2,9 per cent up on the 2006 figure. In December, Toyota accounted for 29,1 per cent of sales in the passenger sector and 35,7 per cent of LCV deliveries.

Toyota's domestic sales total for the year of 155 247 - 4 192 more than the company sold in 2006 - marked the second time a local manufacturer or distributor has sold more than 150 000 units in a year. The Prospecton-based manufacturer was also the country's biggest exporter, ending the year with a bumper 45,3 per cent of built-up vehicle exports in December. Toyota set more records in 2007 as it sold more than 14 000 units a month on three occasions during the year as it headed a fight back by the "Big 7".

The Big 7, which consists of the established local manufacturers, BMW Group, Ford, General Motors, Mercedes-Benz, Nissan, Toyota and Volkswagen, has faced strong and growing opposition from importers in recent years, but fought back in 2007 to lift its share of the local market to a dominant 79,5 per cent.

Volkswagen, hampered by the fact that its commercial vehicle range consists only of low-volume models, retained second position in overall sales behind Toyota, with 101 079 vehicles sold. This was 9 per cent down on the previous year and equated to a loss in market share of 0,7 per cent.

However, VW did have a consolation prize in the form of retaining leadership in the passenger car market, which is a bitterly fought annual battle between the Uitenhage-based company and long-standing rival, Toyota.

General Motors SA and the Ford Motor Company of Southern Africa retained third and fourth position on the overall sales log, although both had lower sales volumes. GMSA's market share remained on 13,5 per cent, but Ford shed 0,4 per cent, dropping to 12 per cent.

The companies in fifth and sixth positions switched place at the end of 2007, with Mercedes-Benz SA, buoyed by excellent sales of its new C-Class, overtaking Nissan, although the margin was only 672 units, compared to the
4 182 unit advantage enjoyed by Nissan at the end of 2006.

The BMW Group (BMW and MINI) stayed in seventh spot, but volume was down 26,5 per cent and it shed 0,5 per cent in share, going down to 4,1 per cent. Honda was the best-performing importer, jumping up the table from 10th to eighth, with its market penetration improving 0,7 per cent to 2,4 per cent on the back of a 35 per cent growth in sales volume. This strong performance pushed Tata down to ninth as they dropped 0,7 per cent in share.

Renault had a disastrous year, despite several new model introductions. Volume slumped by 46 per cent to 8 408 units, compared to 15 574 a year previously which resulted in a loss of 1 per cent in share (down to 1,4 per cent) and bottom position in the Top 10 table.

Poor after sales service is being cited as one of the major reasons for Renault's sales tumble and a number of new programmes are in place to redress the situation. The company is hoping that the introduction of the affordable Sandero hatchback - a Logan derivative - will assist in getting the Renault back on track when it is launched locally in the first quarter of 2009.

PASSENGER CAR MARKET

As mentioned previously, the passenger car market was the segment to suffer most in the downturn. This market was down by 9,7 per cent to 434 633 units, compared with 481 559 units sold in 2006. What caused alarm bells to ring is that the decline came after year-on-year increases of 21,8 per cent in 2004, 25,1 per cent in 2005 and 13,3 per cent 2006.

The combination of Volkswagen/Audi/SEAT continued to set the pace in the passenger car market, selling 96 142 units for a 25 per cent share and a lead of 4 596 units over Toyota/Lexus, which was slightly more than the VW Group's advantage of 3 836 units at the end of 2006. In terms of market share it was 0,1 per cent up for the VW Group (to 25 per cent) and a drop 0,1 per cent to 23,8 per cent for Toyota/Lexus.

Ford lost 0,3 per cent in share (going down to 9,8 per cent), but held on to third place, ahead of GMSA, which gained 0,2 per cent in share (going up to 9,1 per cent) as it homes in on its long-time rival, which is set to lose Land Rover and Jaguar sales in the course of 2008 as these brands are sold off by its parent company, probably toTata.

Sales of Jaguar and Land Rover in SA last year totalled 6 149 units - 5 366 Land Rover SUVs and 783 Jaguars. The gap between Ford and GMSA at the end of last year was only 2 766 units, so the scene is set for a role reversal in 2008.

• Land Rover’s total sales of SUVs and LCVs last year set a record at 5 744 units – helped by best-ever monthly sales in December. The success by the South African division of PAG mirrored the record-breaking performance by the parent company.

Mercedes-Benz SA, shorn of its former partner, Chrysler, bumped up its market share with the biggest increase in the industry at 1,4 per cent, moving up to 8,4 per cent and strengthening its hold on fifth position, with an expanding gap over luxury car rival BMW (market share down 0,5 per cent to 6,5 per cent). Mercedes-Benz Cars posted record sales of 29 008 units for 2007 (including Vito and Viano), an increase of 6,3 per cent over the 27 280 units sold in 2006. C-Class sales of 15 139 units were 22,5 per cent up one the sales figure for this model a year earlier.

Mercedes-Benz's flagship, the S-Class, maintained its dominance in the premium luxury market with sales of 687 units, 74 per cent ahead of its closest competitor.

Nissan, which boosted its sales significantly by feeding large numbers of its Tiida into the rental market, remained in seventh spot with an increase in share of 0,3 per cent to 4,4 per cent.

Honda overtook struggling Renault for eighth position, with its market share going up 1,3 per cent to 3,8 per cent, while the French company's share slipped by 1,4 per cent - the biggest fall of any company - to 2,1 per cent. Tata held on to bottom spot on the Top 10 list, but lost 29 per cent in volume and 0,5 per cent in market penetration.

An interesting development over the last few years has been the substantial decline in the market shares of medium and large passenger cars, which has changed the composition of the overall passenger car market considerably. Medium-sized cars made up 49,6 per cent of the market in 2002, but had decreased to 39,4 per cent in 2007. Similarly, the share of large passenger vehicles slipped from 7,1 per cent to 5,1 per cent over the same period.

A segment that performed strongly was recreational vehicles, which has grown its share from 12,4 per cent in 2002 to 18,8 per cent in 2007. The same applies to "sports and exotics" which almost doubled share from 0,6 per cent to 1,1 per cent in the past five years. (Porsche, for instance, sold 728 cars last year, compared to 464 in 2006 - 57 per cent growth! In the same period, Ferrari went from seven to 50 sales, Lamborghini 15 to 31 and Maserati 15 to 25).

Small passenger vehicles which made up 30,4 per cent of the market in 2002, increased share to 39,6 per cent in 2006, but lost ground in 2007 to end up with a 35,6 per cent of the cake.

2007 marked the first year that sales of imported passenger vehicles (including many brought in by the "Big 7") were higher than those of locally-produced units. Back in 1998, only 12,6 per cent of new cars sold in South Africa were imported, while imported models made up 55,7 per cent of last year's sales.

INDIVIDUAL CAR MODELS

The crown of South Africa's best selling car range moved from Toyota to Volkswagen in 2007, going from the combination of Corolla/Auris/RunX/Verso to the Polo hatch and Classic saloon (9,9 per cent of the car market).

Toyota had snatched the title by the slender margin of 267 units at the end of 2006, but last year it went to the Polo the substantial margin of 3 758 units as Toyota ran out the previous Corolla and RunX ranges and replaced them with the new Corolla and Auris, while the Verso MPV was given a mid-term facelift.

It is interesting to compare the make-up of the Corolla "families" in 2006 and 2007. The total of 41 420 units in 2006 was made up of 28 083 Corolla saloons (67,8 per cent), 9 244 RunX hatchbacks (9,9 per cent) and 4 093 Verso MPVs (22,3 per cent), while last year the mix in the total of 34 222 units was 24 205 Corolla saloons (70,7 per cent for the combination of 15 809 old models and 8 396 new models), 2 808 Auris hatchbacks (8,3 per cent), 4 249 RunX hatchbacks (12,4 per cent) and 2 960 Verso MPVs (8,6 per cent). Combining the RunX and new Auris makes a total of 7 057 hatchbacks (20,7 per cent), showing a big swing to hatches and lesser swing to the Corolla saloon at the expense of the Verso MPV. (The Verso's stablemate, Avanza, is currently far and away the top-selling MPV in South Africa's nowadays).

Toyota's Yaris retained third place among the multitude of model ranges now on offer in SA and bumped up its share by 0,9 per cent to 8,2 per cent.

Despite some negative publicity regarding its popularity among car thieves, and a lack of modern safety aids such as ABS brakes and airbags, the VW CitiGolf continues to sell strongly on the basis of value-for-money and VW's reputation for reliability. It sold 26 403 units to hold on to fourth place among the model ranges and even increased its market share by 0,2 per cent to 6,9 per cent.

The long-awaited Mercedes-Benz C-Class proved an immediate winner and jumped from eighth in 2006 to fifth position last year with sales of 17 048 units, displacing the Opel Corsa/Corsa Classic, VW Golf/Jetta and BMW 3-Series, which placed sixth, seventh and eighth in 2007. Ninth spot was filled by the Nissan Tiida, driven by sales to rental fleets, with Toyota's Avanza overtaking Ford's Fiesta and Focus in its first full year on the market in 10th spot.

COMMERCIAL VEHICLE MARKET

A number of factors contributed to the fact that there were increases in all segments of the commercial vehicle market last year. These included GDP growth that is estimated to reach 4,5 per cent, substantial infrastructure development, the Taxi Recapitalisation Programme and the ongoing swing from rail to road transport, despite projects to make rail transport more attractive.

The total commercial vehicle market - LCV, MCV, HCV, XHCV and large buses - totalled 241 464 units in 2007, which was 3,7 per cent up on the 232 757 units retailed the previous year.

Toyota/Hino took the lion's share of the LCV pickings, aided by a stellar performance by the Hilux. Toyota's total commercial vehicle sales amounted to 63 700 units - 26,4 per cent of the total market.

LIGHT COMMERCIAL VEHICLE MARKET

Toyota regained the leadership position in the LCV market from GMSA in 2007. Toyota, which suffered from a shortage of Hilux stock in 2006, trailed GMSA by 2 136 at the end of that year, but the picture changed completely in 2007. Toyota, boosted by excellent Hilux sales as well as strong demand for the outgoing Hi-Ace Siyaya minibus and the Quantum van and minibus range, sold 58 317 LCVs last year, compared to 44 002 GMSA products - a difference of 14 315 units. That performance saw Toyota increase its market share by an astonishing 6,9 per cent, going up to 30,5 per cent, while GMSA lost 1,7 per cent, going down to 23,1 per cent.

Third, fourth and fifth positions in the LCV market continued to be filled by Ford (down 1,1 per cent to 18,3 per cent), Nissan (down 2,2 per cent to 15,5 per cent) and Mercedes-Benz (down 1,6 per cent to 3,8 per cent) respectively.

Volkswagen's volume remained fairly steady at just over 4 000 units and this allowed them to overtake Tata for eighth place, with the latter losing 1,1 per cent in market penetration (down to 1,8 per cent). Chinese mini-LCV distributor, Chana, jumped from 10th to eighth, overtaking Fiat and Mahindra, which dropped to ninth and 10th spots.

Toyota's Hilux retained its position as the best-selling LCV with volume going up a massive 44,5 per cent and growing share by 5,5 per cent to 18,9 per cent. The second-placed Opel Corsa Utility also grew its volume and dominance of the half-ton bakkie market, while its Isuzu KB stablemate, that placed third, dropped 2,1 per cent in share, although some new engines and a facelift (introduced in the last quarter of 2007), should help its sales going forward.

Ford's Bantam half-tonner, the Nissan Hardbody, Ford Ranger and Toyota Hi-Ace minibus retained fourth, fifth, sixth and seven positions. The Toyota Quantum minibus and van jumped into the top 10 LCV list in eighth place, overtaking the Nissan B140, Mitsubishi Colt/Triton and Tata Telcoline. The Nissan B140, which has reached the end of its extended production life, placed ninth, ahead of the Colt/Triton, with the Telcoline slipping down to 12th, behind the Nissan Navara.

MEDIUM COMMERCIAL VEHICLES (3 501 - 8500kg)

As mentioned earlier, the MCV market increased by 6,5 per cent with record sales of 15 168 units. Toyota Truck's Dyna retained its leadership position, with sales of a record 2 960 units (101 units more Dynas than were sold in 2006), but that was not enough to prevent a 0,6 per cent drop in share to 19,5 per cent. However, its nearest rival in 2006, the Tata, fared worse, dropping in both volume and share (down 3,3 per cent) and slipping down to third in the 2007 rankings, with the Mercedes-Benz Sprinter, benefiting from demand for its midi-bus by taxi operators, regaining runner-up position, with share up 2,2 per cent.

The Nissan Cabstar (up 1,7 per cent in share), Isuzu (down 0,5 per cent), Iveco Daily (up 2 per cent with a boost from strong taxi sales) and Mitsubishi Fuso (up 0,4 per cent) hung on to fourth, fifth, sixth and seventh positions, while Nissan's panel vans and minibuses moved up from ninth to eighth, displacing the Ford F250. The Russian GAZelle minibus, of which imports have now been discontinued, brought up the tail in 10th spot, with 393 sales.

HEAVY TRUCK MARKET (5 501 - 16 500kg)

Toyota Trucks retained its hold on the leadership position in the heavy truck market with its Hino 500-Series, with the best share growth in the segment - up 2,2 per cent on the back of a 23,7 per cent growth in sales volume (up from 1 509 to 1 866 units). Its closest challenger, Nissan Diesel, also had a good year, with volume up 19 per cent (1 356 to 1 615) and penetration improving 1,2 per cent.

Tata overtook Isuzu for third place, despite losing 0,7 per cent in share (Isuzu lost 1,3 per cent). For the rest, positions remained unchanged with Mercedes-Benz, Fuso, MAN and Iveco filling positions five to eight in a market that grew 12,5 per cent to a record 7 530 units.

EXTRA-HEAVY TRUCK MARKET (above 16 501kg)

This sector continued to be dominated by Mercedes-Benz with sales of 2 591 units last year for a share of almost 20 per cent. What's more, its stablemates Freightliner sold 1 816 units and Mitsubishi Fuso 311 units.

Nissan Diesel held on to third spot with an impressive increase of 2,4 per cent in its share of a growing segment (sales up 20,2 per cent). The other big winner was Super Group's Firmaco subsidiary, which entered the extra-heavy market with its Powerstar trucks and immediately took 3,4 per cent of the segment for 10th spot with 449 sales, which placed these Chinese vehicles above long established manufacturers such as Isuzu, Iveco, DAF and Renault.

Losers were Tata (down 3,3 per cent from 8,1 per cent and fifth place to 4,8 per cent and eighth position), DAF (down 2,8 per cent) and MAN (down 2,6 per cent).

BUSES (over 8 501kg)

The bus market remained fairly static in 2007, with only 2 per cent growth from 1 250 sales in 2006 to 1 276 last year. There was consolation for MAN which fared disappointingly in the heavy and extra-heavy truck markets. It retained top spot in the bus market and grew its share 7,6 per cent to a dominant 42,7 per cent, ahead of Mercedes-Benz (down 4,7 per cent to 23,6 per cent) and Scania (up 4,2 per cent to 21,3 per cent).

Volvo, which had a pretty successful year in sales of its big trucks dropped from a significant player in the bus market in 2006 (13,4 per cent share) to the ranks of the also-rans last year, with a fall of 10,1 per cent in penetration.