By Roger Houghton

"Crisis? What crisis?" These chilling words have rapidly become part of the South African ethos and, unfortunately it is now a cry that is very close to the bone for the local motor industry.

The economic slowdown locally and the global meltdown have had an almost catastrophic effect on vehicle sales worldwide and South Africa is no exception.

Consider these facts:

• Total year-to-date sales down 18,5%
• General Motors SA laying off 1 000 people
• Ford SA laying off 800 people
• BMW is “easing back” on temporary and contract workers.
• Nissan and Volkswagen have already worked short time or had short spells of no production to balance stock levels.
• Business confidence has plunged to its lowest level since 2001
• There seems little likelihood of the interest rate dropping in the near future.
• Household debt in SA is at an all time high.
• Rand hits a seven-year low against the US dollar.
• The number of cars being repossessed monthly by financial institutions is reputed to be between 5 000 and 6 000. Most of them are in the income group earning R15 000 p.m. or less, as well as in the group with 60-month contracts and those buying cars five or more years old.
• Jeff Osborne, CEO of the Retail Motor Industry organisation (RMI) says anecdotal evidence indicates that about 100 new and used dealerships have closed already this year.
• Most of the listed motor companies on the JSE – except Steinhoff’s Unitrans - are reporting disappointing financial results for the past financial year.
• The large stock build up at McCarthy’s auctioneering arm, Burchmore’s, resulted in them holding a 1 000 vehicle “stock clearance sale” at Expo Centre, Johannesburg. A total of 2 600 people attended the sale, looking for bargains and 810 of the vehicles were sold.
• The management of Volkswagen SA had to eat humble pie as they folded their SEAT operation only two years after launching the Spanish cars as premium models above VWs, and then hastily “repositioning” them as slightly cheaper options. The reason for the closure is given as “unviability”, with sales averaging only about 100 units a month instead of the projected 300.
• McCarthy CEO, Brand Pretorius, is quoted as saying that he had “never witnessed such volatility and uncertainty”.
• The financial crisis in most overseas markets is causing new vehicle sales to drop drastically, which is likely to impact on exports by SA manufacturers.

This is certainly not a pretty picture and the outlook for the rest of the year and going into 2009 also looks bleak.

However, for now let us look at what happened in terms of motor vehicle sales in South Africa in the first three quarters of 2008.

Total sales in the first nine months of 2008 totalled 422 828 units, which was a drop of 18,5% on the 518 709 vehicles sold in the same period last year.

The biggest bloodbath was in the passenger car segment, with a fall of 21,9% to 260 812 units, although sales of light commercial vehicles (LCVs) at 134 334 units were also disappointing at a 14,7% decrease, because this sector had been holding up much better than the cars in the early days of the sales slump.

Trucks sales - particularly in the extra-heavy segment - continue to buoy the market. The total truck market was 1,1% up, despite medium truck sales dropping 13% and heavy truck demand dropping by 2,5%. Balancing out these downward slides was growth of 16,3% in the top end of the truck market, while bus sales were up 21,7%, albeit off a small base.

Associated Motor Holdings, which do not submit detailed sales reports to NAAMSA, are also feeling the pain, with sales for the first nine months of the year down 26% to 36 913 from 50 057 a year previously.

As mentioned in previous issues of MIND, Toyota seems to benefit in terms of market share in economic downturn. This is the case again, with the overall market leader since 1980 growing its share 1,8% to 26,1%, despite a 21,5% drop in volume.

Volkswagen retained second place, but was the biggest loser in the industry as it lost 2,3% in share and ended up on 14,5%, and only 2 659 units ahead of General Motors SA, which increased its penetration by 0,6% to 13,8%. Compare this to VW's situation a year before when it had 16,8% market share and GMSA was a distant third, 16 682 units behind.

Ford remained in fourth spot, with penetration up by 0,5%. Mercedes-Benz SA and Nissan swopped fifth and sixth positions, with MBSA growing share by 1,3% and moving ahead of the Japanese company, which lost 1,4%.

The BMW Group, Honda and Tata held position in 7th, 8th and 9th spots, while Peugeot dropped out of the top 10 to be replaced by the new, Tata-owned Jaguar/Land Rover combination.

PASSENGER CARS:

Toyota extended its dominance into the passenger car segment as it upstaged last year's segment leader, Volkswagen. The former company lifted its share 0,9%, while VW was again the biggest loser in the market, dropping 2,9% in share. The gap which had been 22 584 units in favour of the Eastern Cape manufacturer in September 2007 had switched to an advantage of 2 288 units in favour of Toyota this time around.

The big winner is Ford, which moved up from fifth to third, overtaking Mercedes-Benz and GMSA.. The next three companies on the Top 10 list remained BMW, Nissan and Honda, with Jaguar/Land Rover replacing Renault in ninth spot The latter has slumped right down to 13th spot and is obviously hoping that the Logan sedan and its hatchback derivative, the Sandero, will get them back on track again in terms of sales volumes. Making up the top 10 for the first nine months of 2008 is Chrysler SA.

Volkswagen's Polo hatch and sedan continued to reign supreme among the individual model ranges, but it has lost ground to Toyota's Yaris, which jumped from third to second in the rankings with 1,3% growth in share. This put Yaris above its Corolla/Auris/Verso stable mate.

There was an interesting change in fourth and fifth spots, with the C-Class Mercedes-Benz overtaking the evergreen CitiGolf budget car. The BMW 3-Series also improved its position, moving up to sixth position, from seventh a year earlier. The Opel Corsa was another range to push down the VW Golf 5/Jetta, going from eighth to seventh as the Golf/Jetta fell from sixth to eighth.

Mazda2, a newcomer and winner of the Car of the Year accolades in SA and in the World came straight into the top 10, placing ninth, ahead of the Toyota Fortuner SUV. A year ago ninth and 10th places had been occupied by the Audi A4 and Nissan Tiida.

In terms of the various niches in the passenger car market, we see the Fortuner continuing to be the runaway leader in the SUV market, with 5 527 units sold in the first nine months of 2008.

Behind this Hilux-based model we see the Chevrolet Captiva (1 457 units) and Honda CR-V (1 422), but then come some interesting developments, especially the fact that many more expensive models such as the BMW X5 (1 597) Land Rover Discovery 3 (1 324) , Mercedes-Benz M-Class (1 077), Toyota Prado (986), Mitsubishi Pajero (905) and BMW X3 (874) are now well ahead of some of the more affordable SUV options such as Toyota's RAV4 (652) and the Mitsubishi Outlander (477).

The big loser in recent years has been the Jeep brand, which used to be a big seller with its Cherokee range. Although the number of Jeep models has multiplied in recent years none of them sell better than double digit figures each month, so are no longer major players in a market where they were in at the start.

LIGHT COMMERCIAL VEHICLES:

As mentioned earlier, the total LCV market's sales of 125 989 units for the year to date was down 14,7% on the same period in 2007, when 146 899
units were sold.

Toyota is really putting its stamp on the local LCV market this year ,with its share growing 3,9% to 33,2% on the back of sales of 41 815 units … and that without the benefit of a contender in the fast-growing half-ton market! GMSA improved its share by 1,8% and stayed in a firm second place, but well behind the segment leader with 24,4% penetration

Ford and Nissan, remained in third and fourth spots, but both lost share - Nissan plunging 4,6% and no doubt hoping the new Renault Logan-based NP200 half-ton pick-up will regain some of these lost sales for them.

Mercedes-Benz's combination of the Vito with Mitsubishi's Colt and Triton remained the fifth most popular seller with a slight improvement in penetration.

Volkswagen, with its limited range, stayed in sixth position, and is no doubt very anxious for the launch of the Argentinean-made one-ton pick-up, codenamed Robust, but rumoured to revive an old VW pick-up name, Taro, when the production model is launched.. The Taro was a rebadged Toyota Hilux made in Germany and sold on European markets between 1989 and 1996, when the project ended due to poor sales.

Chana, one of the most successful Chinese brands to have come to SA, must have surprised some industry commentators as it jumped from ninth to seventh despite a smallish range. Another Chinese range, GoNow, is in eighth spot, followed by the Fiat Group (down from eighth a year previously) and Tata.

The Hilux continues to lead the way in terms of the best-selling product range, with the Opel Corsa Utility retaining runner-up position. However, the big shake-up is the Toyota Quantum, which rocketed from eighth at the end of the first nine months of 2007 to third place this year, only 382 units behind the Corsa Utility!

This underlines the power of the Taxi Recapitalisation Programme and emphasises how the taxi fraternity has moved across to the more expensive Quantum range when its beloved Hi-Ace Siyaya was discontinued last year.

The Isuzu KB range grew its share slightly to retain fourth position, ahead of the Ford Bantam (down from third spot a year earlier) and Nissan Hardbody, which had overtaken the Ford Ranger (now seventh). The Nissan B-140, in run-out prior to the arrival of the NP200, ended its long career in eighth spot, with the Mitsubishi Colt/Triton holding on to ninth and Mazda BT-50 moving into 10th position, which was held by the Nissan Navara a year ago.

MEDIUM TRUCK MARKET (3 501-8 500KG GVM):

The medium truck market has slowed substantially in recent months and sales are down 13% on a year-to-date basis.

Toyota's Dyna continues to rule this segment with its share having grown 3,6% to 22,6%. The Mercedes-Benz Sprinter, also benefitting from sales to the taxi industry, grew its share 3% to hold second spot with 18% of the market. Tata held on to third position, despite a slump of 4,9% in share - the biggest fall in the segment.

Isuzu overtook Nissan Diesel for fourth position, with Volkswagen's Crafter range jumping from ninth to sixth and displacing Iveco (down to seventh), Nissan Interstar (still in eighth) and Fuso Canter (down to ninth). Tenth spot is filled by the Peugeot Boxer with the Ford F250 pick-up having been taken off the market since it held 10th position last year.

HEAVY TRUCK MARKET (8 501-16 500KG GVM):

The heavy truck market has seen a slight drop in demand, with sales falling 2,5% on a year-to-date basis.

This market remains the battleground of the three Japanese brands, Hino, Nissan Diesel and Isuzu, with Tata having put in a bit of a challenge in 2007 before shedding 5,8% in share and falling from third to fourth position as volume fell by 34%. Hino improved its penetration by 1,6% to 26,1%, while Nissan Diesel went up only 0,2%, while Isuzu moved up 2,9% and was only 118 units behind Nissan Diesel at the end of September.

Mercedes-Benz, Mitsubishi Fuso and MAN retained fifth, sixth and seventh positions on the popularity list with Volkswagen in eighth, ahead of Iveco.

EXTRA-HEAVY TRUCK MARKET (OVER 16 500KG GVM):

The strong growth still being experienced in this top-end truck market is testimony to the many infrastructural projects currently under way in South Africa, with a year-on-year sales increase of 25%.

This is a market where Mercedes-Benz has been strongly positioned for many years. In addition to its own Mercedes-Benz trucks with a 20% share it also has the fourth-ranked Freightliner in its stable. Freightliner has grown its share by 3,8% and moved from sixth to fourth.

Nissan Diesel, aided by its strong-selling new Quon range, has moved from third to second, pushing MAN down to third spot. Others making up the top 10 were: Volvo, Scania and International (tied for sixth), Tata, Hino and Fuso.

LOOKING AHEAD:

The current global turmoil makes it very difficult for any projections into the future.

"Prospects for the last quarter are not encouraging as the turmoil of the global economy, with its resultant knock-on effect in SA, is likely to affect business and consumer confidence adversely," says McCarthy CEO Brand Pretorius.

According to NAAMSA, commenting on the domestic forward-looking sales perspective, the "inflation and interest rate cycles were close to a peak and inflationary pressures are likely to abate during 2009 with interest rates set to follow suit." NAAMSA expects an improvement in the financial position of consumers in the second half of 2009, giving rise to optimism of a recovery in demand for new motor vehicles."