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As much as the automotive industry has seen significant and rapid changes over the last two decades, there has been several focus areas that have shown only slight variations.
Automotive data specialists Lightstone, reveal that new vehicle dealers in South Africa reflected an upward trend from a base of 1600 dealers in 1999 to 2100 dealers in 2014, but then declined to 1700 in 2018.
Looking at the commercial scene, dealerships have dropped during the same period from 450 in 1999 to 350 in 2018.
This could be attributed to the contraction of dealerships on a regional level with smaller premises located outside of the bigger metro areas. It could also be as a result of OEM’s combining brand sales, for example selling Renault, Volvo and UD Trucks or the merging of Volkswagen SA Trucks and Buses into MAN Truck and Bus SA.
The statistics of dealership trends over the last decade, reveal a slight drop in 2018 when General Motors exited the country.
In an interesting finding, comparing property and vehicle prices from 1999 to 2018, it is peculiar to see the cost of these two assets essentially on par in 1999. Fast forward to 2018 where an average priced property is almost 2.5 times more expensive than a new vehicle.
Heinrich Coetzee from Lightstone said: "This finding is largely attributed to supply and demand, where properties have become sound investments and vehicles lose their value fairly quickly.
Looking at the numbers, we can also see that more properties were sold at a cheaper price point in 1999 compared to the smaller volume of properties sold at a higher price point in 2018.
Coetzee said: "Although we’d need to segment the buyers of this market, we can assume that the shift in purchasing behaviour over the last 10 years can be ascribed to the economic pressure the middle segment of the market faces which wouldn’t necessarily affect the higher end of the market that continue to purchase property at higher price points."
Vehicle market share
During the late 1990’s the top three spots for light vehicles was shared by Nissan, Toyota and Volkswagen, occupying 47% of the market. In the present, results indicate Nissan has been replaced by Ford and the three top brands own 51% of the market share.
Coetzee said: "When it comes to light vehicle brands (combination of passenger and light commercial), it appears that consumers tend to be brand loyal to the bigger brands and possibly opt for the vehicle which is, in their opinion, the best buy in the long term; especially when taking affordability and reliable after sales service into account."
Within the commercial market, the complete opposite is revealed with enterprise choosing a workhorse over a traditional brand.
Coetzee said: "Due to the increasing competitive nature of the trade industry in South Africa we see companies opting for the ‘better deal’ and choosing value for money, with a key driver being fleet cost of ownership and de-fleeting costs."
Mercedes Benz used to be, and remains, the top in commercial vehicle sales. Isuzu Trucks has climbed into second place and Hino (a Toyota brand) comes in third.
Growth
With the increase in the number of vehicle brands over the past 20 years, it is to be expected that the vehicle models will also increase exponentially. New vehicle sales experienced a slight increase in 2007 – 2008 before the international financial crisis which resulted in a global and local recession. The commercial market peaked in 2009 – 2010 when South Africa played host to the Soccer World Cup where the demand for trade vehicles increased.
Average sales per dealer
Lightstone data further reveals how the real Weighted Average Price (WAP), which is the inflation adjusted weighted average price, has changed over the last 20 years for the top ten brands in South Africa. Coetzee said: "The results clearly show a remarkable climb of almost 50% in real WAP for Ford, Mazda and Toyota, whereas Nissan only experienced growth of 4%, and Honda has dropped by 2% since 1999."
According to Coetzee the drop in the Honda real WAP could mainly be attributed to the introduction of the entry level offerings of the Amaze and Brio, currently accumulating to 30%.
He said: "A move such as this will inevitably drop the real WAP figures of a brand."
Over the last twenty years, brands have aggressively increased their number of model variations, body shapes and vehicle brand entries into the market – especially in the Premium Brand segment with BMW’s brand portfolio growing by a whopping 450% and Mercedes Benz by 554%. Toyota, Volkswagen and Ford have increased their number of available models with 189%, 281% and 196%, respectively from 1999 to present. In a very competitive market, brands will continue to expand their portfolio in order to reach a larger consumer base and gain the lead where possible.
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