South Africa: the manufacturers adapt
With a population of around 53 million, South Africa represents a market of similar size to the UK and France. It has a great deal more potential than either of these, however, as annual new car sales are currently only around 600,000, against something like 1.6 million in France and over 2 million in the UK.
Within this context, we asked some of the major manufacturers what their strategies are in South Africa, and what the country is like to operate in. And to reinforce the point, Francis Harnie, Managing Director, Peugeot Citroën South Africa, pointed out that the South African market still sees around one out of three buyers coming to the market as first time buyers, not ‘replacement’ buyers.
One of the first facts to emerge very clearly is that South Africans ‘use’ their cars – so SUV’s and pick-ups etc. are very popular. Mercedes-Benz (Maretha Gerber, Manager, Dealer Network Strategy), confirmed that Mercedes-Benz also offers tow-bars in a country which favours cars such as SUV’s and pick-ups for leisure and off-road travel. Peugeot Citroën confirmed that around 40% of the whole market is in SUV’s 4x4’s and pick-ups ‘bakkies’ as they are known.
And GM’s Brian Olson, GMSA Vice President Vehicle Sales, Service and Marketing, said that it too offers SUV and MPV models such as the Chevrolet Orlando, Captiva and Trailblazer; on the utility side there is theChevrolet Utility, a sub-one ton vehicle and its Isuzu KB, one ton vehicle.
Toyota’s Marius Senekal, Senior Manager, Corporate Sales, confirms that its light commercial range is the best selling range in South Africa – the double cab and single cab Hilux and the Fortuna – an SUV. This is based on the Hilux double cab chassis and is popular for both off-road and on-road. Toyota is seeing a shift from large passenger cars to these SUV and life-style vehicles. And the best selling Nissan models in South Africa are NP 300 and NP 200. These are available in various guises including pickup, and are basically one-tonne load and half-tonne load in the pick-up variant.
This ‘utility’ focus, along with road conditions in surrounding countries in particular, leads to a policy designed to take such conditions into account. In the words of Toyota, for parts of Africa there is a need for what the company calls a ‘harsher road package’ to cope with poor roads, although this is not considered to be the case in South Africa itself. The added elements to be fitted where it is necessary include harder suspension, fuel line protection…
There is an important passenger car market nevertheless, and in some ways this reflects what is seen in Europe. Peugeot Citroën says that there is a large passenger car market, especially in the B-segment, which accounts for another 40% of the market. Its own best seller across all ranges is the Peugeot 208. General Motors South Africa sells Chevrolet, Opel and Isuzu brands. The models vary from entry level passenger vehicles such as the Chevrolet Spark, to sedans and hatches, such as Chevrolet Aveo, Sonic, Cruze and Opel Astra and Corsa.
The rest of the market, Francis Harnie confirms, sees the premium brands well represented, with the top German brands selling well here. Mercedes-Benz says that with consistent market share, through two generations, the C-Class remains a top seller. This desire for premium models means that the Citroën DS range also sells well, and represents 35% of all Citroën sales. The DS3 is the best seller of the DS range, while the DS4 has been revised in terms of engines for the market. Another interesting point to be taken into account: white is a very popular vehicle exterior colour and sunroofs are important. Hybrids, says acknowledged expert Toyota, have not yet reached the mainstream in South Africa, although the government is talking about using green vehicles going forward.
Volkswagen provides key account management for fleets, with a loyalty program and added value services. Most of the direct corporate operation is handled by the dealer network. These dealers are franchises and not wholly owned by Volkswagen. The added value services include items such as after-hours servicing, priority servicing, weekend servicing. Some of the dealers, especially in the larger metropolitan areas, have dedicated bays for this.
Volkswagen also offers customised maintenance plans for its top fleets, which are unique in terms of the customer’s specific requirements – in terms of distance or time for example. These plans are based on the customer’s historical drive and servicing – these cars cover high mileages.
Mercedes-Benz runs a fleet programme in conjunction with its dealers. This programme is designed to take care of various categories of corporate customers: corporate clients (of a certain size), who qualify for a recommended discount on the price and a specific service agreement. In these cases, Mercedes-Benz markets the car offering directly to the corporate company’s employees. There is a slightly different structure for each of the five categories, the other four being special groups (doctors, dentists, engineers…), lease companies, rental companies and government. Leasing companies are subject to special agreements on service and maintenance should they sign a national framework agreement with MBSA.
Fleet services offered by Toyota in South Africa are taken care of by a specific team. The company refers to customers acquiring from 40 to several thousand cars a year as ‘strategic fleet’. Any enquiries, whether involving stock or pricing, go through the dealer network first. Toyota does not supply directly to company fleets. The only two direct channels it has which goes outside of the dealership network are, firstly, the top five car rental customers. One of these purchases over 5,000 vehicles a year. The other channel which is handled directly is government sales, because this is put out by the government to tender. Toyota does not, therefore, consider these two channels to be part of its normal fleet activities.
In GM’s case, it says that it offers sales and aftersales services to its fleet customers and they are supported by an extensive dealer network
GM’s customer profiles vary from the small fleet owners who have 5+ vehicles in their fleets, to major customers with in excess of 100+ units in their fleets.
Toyota manufactures around 150,000 cars a year in South Africa for local sales and the same number again for export. Mercedes-Benz manufactures the C-Class in South Africa, and exports 80% of its production. There were 50,000 units of the outgoing C-Class manufactured in 2013. This year, 100,000 units of the new C-Class are scheduled to be built in the plant at East London.
Volkswagen builds over 100,000 vehicles per year in South Africa, split 60/40 export/South African market. Volkswagen builds the Polo Vivo which is unique for South Africa and is fleet specific. The other model is the normal Polo, built in both left and right hand drive versions. The Cross Polo is also built in South Africa (and nowhere else) for the global market.
General Motors manufactures the Chevrolet Utility, Chevrolet Spark and Isuzu KB at its Struandale plant in Port Elizabeth. PSA Peugeot Citroën does not currently manufacture cars in South Africa, but is looking at opportunities. This would not be by constructing a plant of its own, however, but by partnering with another company which already has production facilities or which is thinking of coming into the country, if this is a viable proposition.
Nissan manufactures in South Africa as well as importing. Along with the NP 200 and NP 300, its factory produces Sandero for partner company Renault. Output is around 60,000 units per year, some of which is exported to other parts of Africa in both left and right hand drive versions.
The South African market – NAAMSA paints the picture
In a press release, the South African automotive association NAAMSA says that in June (the latest data available), domestic new vehicle sales had shown some resilience despite the South African economy continuing to experience pressures in the form of slower economic growth, high levels of industrial action, rising inflationary pressures and exchange rate vulnerability. The domestic market, it said, was expected to continue to face head winds over the short to medium term in sharp contrast to developments internationally which were characterised by expanding vehicle sales in China, the United States and Europe.
NAAMSA reports that June 2014 saw aggregate new vehicle sales at 52,837 units, a modest decline of 1,251 vehicles or a fall of 2.3% compared to the 54,088 vehicles sold in June last year. The June, 2014 export sales total at 24,024 units reflected a marginal decline of 195 vehicles or a fall of 0.8% compared to the 24 219 vehicles exported in June last year. Overall, out of the total (disaggregated) reported Industry sales of 52,837 vehicles, 83.8% represented dealer sales, 8.3% represented sales to the vehicle rental Industry, 4.4% to Industry corporate fleets and 3.5% to government.
| 16/09/2014 | Tim Harrup