You see more of them on our roads than any other brand but how strong is Toyota and VW’s market presence in actual numbers.
Much like property valuations vary by area, vehicle sales do the same when associated with brand – and general state of an economy. When people have to pay a significant part of their monthly disposable income towards a vehicle, they choose to support proven brands.
This issue become most evident during periods of economic distress, when consumers become increasingly risk averse. South Africa’s economy is struggling, but that does not mean there are no new vehicle buyers.
Prospective first time owners and those drivers looking to replace their vehicles are shopping and their behaviours are clear: Toyota and VW.
The South African new car market is clearly divided between these two brands, which effectively dominate the bakkie/SUV and compact passenger car markets.
Their scale enable powerful supply chain dynamics, mediating parts and service costs, and economies of scale, which make it easy to sell a pre-owned Toyota or VW, as there is huge demand. Halfway through 2019 Toyota remains South Africa’s most popular vehicle brand.
In fact, its market share is increasing – which shows that during a period of economic difficulty, Toyota’s local business is growing, at the cost of its rivals. For VW, it is much the same, with virtually no passenger car brand threatening to displace it from the second overall place within South Africa’s new vehicle sales ranking.
Hilux is not only about single-cabs
Toyota’s dominance of the local bakkie market has been crushingly consistent. Some commentators have voiced opinion that most of its volume is concentrated in the single-cab commercial market, supplying fleets, and therefore not a true reflection of private buyers preference. But a breakdown for Hilux’s best sales month in five decades, which was this June, tells us a very different story.
Of the 4335 Hilux bakkies sold, the majority were double-cabs, five-seater Hilux bakkies accounted for 1855 units of the total June volumes. To put that in perspective, Toyota sold 15% more Hilux double-cabs than Isuzu’s entire South African bakkie business last month.
The fallacy of Toyota’s Hilux range not being a lead double-cab business appears to be have been disproven.
VW untouchable as a non-bakkie brand
For VW, its dominance of South African passenger car spend is also inarguable. To find a competitor for VW is challenging, but Hyundai is perhaps closest: selling hatchbacks and crossovers/SUVs in most of the same segments.
If we take VW’s total June sales of 7234 and extract Amarok (225), the non-bakkie business is still 7209 sales strong. That makes it a much fairer comparison to Hyundai, which does not sell a bakkie.
Image: VW Polo
Compare the two and VW’s non-bakkie volumes of 7209 are nearly three-times that of Hyundai’s 2560. You could make a counter argument that Hyundai suffers the disadvantage of being a pure importer, so let us do the same analysis, with a brand which also builds locally and can extract and reinvest export credits.
Nissan ranks as South Africa’s third largest automotive brand and has a similar local assembly advantage to VW. It also sells a range of compact hatchbacks and crossovers in its product-line.
Take out the bakkie part of Nissan’s business and its passenger cars and crossover/SUVs only accounted for 1887 sales, less than half its 4503 transactions in June.
That means that the gap in pure passenger car volumes between second (VW) and third place (Nissan) in South Africa’s overall sales ranking is 282%, illustrating VW’s dominance of South Africa’s non-bakkie market.