- Market driven by high level of competition
- Toyota exports 25% of all vehicles in South Africa
- Slowdown in growth expected
Toyota South Africa Motors (TSAM) continued to power ahead with sales of 10 087 new vehicles in June. This represents nearly 19% of the total sales of 53 562 units reported by the National Association of Automotive Manufacturers of South Africa (Naamsa).
“June’s sales are close to the heady levels of 2007 (of 54 025 units in June 2007) and shows that the market continues to perform strongly, despite the somewhat depressed underlying economic indicators,” says Calvyn Hamman, Senior Vice President of Sales and Marketing at Toyota South Africa Motors.
New vehicle sales increased by 3.3% over the same month last year and were on par with sales in May. The Toyota Hilux, with sales of 3 070 units, remains South Africa’s most popular vehicle.
According to Hamman the market is being strongly driven by competition amongst vehicle manufacturers and not an underlying strength in the sales market. Some strength remains, he says, from customers purchasing vehicles before an expected vehicle price increase and before the cost of capital increase as banks increase their lending rates to customers.
“The level of competition in the South African market is extremely fierce,” says Hamman. “Some vehicle manufacturers purchased a great number of their own vehicles for their staff and marketing purposes, thereby artificially stimulating sales.”
Despite the high level of competition the industry expect a slowdown in sales growth for the second half of the year. Interest rates offered to customers are increasing and affects affordability. In addition to this fears of possible price increases due to exchange rate deterioration pulled forward some customers buying decisions.
“Economic growth, the household debt-to-income ratio and general debt levels all point to a slowdown in the market with limited momentum available to push further growth,” says Hamman. “We will see an increase in purchases by government institutions and vehicle rental groups towards the end of the third quarter, but that will not be enough to push monthly sales back into double digit growth.”
Toyota continues to lead the way with vehicle exports. In June it exported 6 462 units to 58 countries across the globe, which represents more than 25% of all vehicle exports from South Africa.