MOTORING: New Vehicle Sales Breeze Past Expectations
Recent Gauteng Business News
“We saw forces that pulled our expectations in all directions, from the strike of automotive manufacturing workers that halted production for several days to greater dealer level activity before the introduction of the new carbon tax (CO2 tax). On balance our view was that August would be a good month, but the increase of 36.9% over August last year surprised even the most optimistic analyst,” says Andrew Kirby, Senior Vice President: Sales and Marketing for Toyota South Africa Motors.
In August vehicle retailers handed over the keys of 46 377 new vehicles. This is not only the best month yet in 2010, but also the biggest overall market since April 2008.
“Several counters did exceptionally well last month,” says Kirby. “Dealership sales, a strong measurement of private buyer activity, represented more than 80% of all new vehicles (32 302 vehicles) and recorded its best month since March 2008. Keep in mind that this figure does not include the dealer sales numbers for partial reporters to Naamsa, which implies that this figure is indeed higher.”
“In the same fashion rental companies bought 5 388 vehicles, which far exceeded expectations for this time of year, especially with cognisance of the fact that many sales were already pulled forward to accommodate the 2010 Soccer World Cup. It appears as though both private buyers and rental companies advanced purchases in anticipation of the introduction of the CO2 tax on 1 September.”
The expected price increase of roughly 2.5% on all passenger vehicles, and uncertainty regarding the inclusion of light commercials in the CO2 tax, pulled many buyers into dealerships. One can also see the traces of this in the disproportionate increase in SUV sales, as these large engined vehicles attract a much larger CO2 tax penalty, and in the increase in applications for vehicle finance, which jumped by 9.35% as recorded by Toyota Financial Services.
In the Toyota stable the Fortuner (1 044 units) and the Prado (329 units) maintained their respective market leadership positions, while the Hilux topped the overall sales chart with 2 628 units sold, more than double that of its nearest competitor.
In what will in future months surely be known as the “CO2 impact” several segments showed good positive movement. Luxury vehicles experienced its best August in two years, but their proportional contribution to overall sales declined somewhat. Amidst this growth Toyota’s luxury affiliate Lexus grew its market share for the third consecutive month, beating internal sales targets.
Small Sub B and B segment sales continued to show significant growth, with some variance on expected sales that can be contributed to the “CO2 impact”.
“With several new entrants into this entry level market buyers are spoilt for choice and this has driven sales in this market significantly,” says Kirby.
One casualty of the growth entry level vehicle sales is used vehicles in the R110 000 to R130 000 bracket. This trend has continued for some time and will put pressure on the selling price of used vehicles in this segment. On the flipside of this coin is a significant interest in low mileage SUV and double cab vehicles, as recorded by Toyota’s used vehicle affiliate Automark. This trend is set to continue as many buyers aim to circumvent the CO2 tax on large SUV’s.
Commercial vehicle sales, excluding bakkies and other light commercials, improved by 33% over the same month in 2009, but overall sales volumes for the year to date remain closer to 2009 levels if one give consideration of the increase in, amongst other things, bus sales prior to the 2010 Soccer World Cup.
“It is interesting to note the movement in some sub-segments of the commercial vehicle market. Extra heavy vehicles recorded their best month for the year (769 units), which points to a good level of confidence in the overall economy. The mining sector was a big buyer in this market in August.
“Another interesting trend, as reported by our commercial vehicle affiliate Hino, is the increase in sales of medium sized trucks for use by vehicle carriers. It is clear that this trend follows the growth in the overall market and it is heartening to know that many brands chose the trusty Hino to ensure that their vehicles reach the dealership on time,” says Kirby.
“For the current month, we expect many of last months concerns to become headaches. With the ‘CO2 impact’ largely stripped out and major pressure on available stock due to the forward purchases, lost production days and the current strike in the component industry, we expect shortages of many locally manufactured vehicles. Despite this we remain on track for an approximate 20% increase in 2010, with a market that should top 480 000 units soon after Christmas,” says Kirby.
“Do not expect the last word on the ‘CO2 impact’ as yet,” says Kirby. “Many vehicle brands have implemented the tax in different ways and as Toyota we have made the decision to subsidise the cost on models fitted with our leading Optimal Drive technology. By doing this we believe that we are honouring the intention of the CO2 tax in motivating buyers to consider more environmentally friendly vehicles.”
Business News Sector Tags: Motoring|