Automotive sales figures reflect decline, but there is hope

National Association of Automobile Manufacturers of South Africa (Naamsa) president and Nissan Group Africa MD Mike Whitfield tells Engineering News that the recent slight decline in light commercial vehicle (LCV) sales is “positive”, contrasting with the bigger decline in passenger vehicle sales.

“Recent statistics show that LCVs are holding up better than passenger vehicle sales. The LCV market – which includes trucks, vans, pick-up trucks and utility vehicles – is the only segment with a single-digit decline in sales,” he says.

In August, passenger vehicle sales declined by 13.5%, while LCV sales declined by 1%.

“The majority of the LCV market is linked to one-tonner vehicles, with the country producing a significant quantum of 300 000 LCVs a year,” Whitfield adds, saying that this is a significant part of overall production in the country.

From a production point of view, LCV’s are a key focus point for export into Africa and other markets.

“The growing trend of LCV exports to Africa and outside Africa is a trend on which the automotive industry needs to build,” Whitfield highlights.

He says Nissan’s core focus is to build on this trend, as the LCV segment is the cornerstone of manufacturing activities in the country and in Africa, which depends on continued development and production in the sector.

“The focus should be on increased breadth and depth levels of LCV localisation to continue improving competitiveness.”

According to Whitfield, competitiveness is the key driver of growing an export business: “If the country cannot maintain a competitive advantage over other production sources and bases, the sustainability of South Africa being an excellent base is limited.”

However, current economic issues, such as high commodity and low oil prices, are affecting growth of Africa’s automotive sector.

“It is a difficult market, owing to industry demands for affordable new vehicles that compare favourably to the flood of direct imports or grey vehicles. This type of demand is driven by the low levels of economic growth,” he says, explaining that the low oil price affects a number of countries in Africa.

Whitfield adds that “Africa will bounce back, as will the demand for new vehicles, as the continent is resilient”.

He says growing the export of vehicles to Africa is Nissan’s priority, noting that it is essential from a manufacturing perspective that South Africa is well-positioned to take advantage of the growth potential in Africa.

Whitfield warns of the major challenge being production sources, such as China and Thailand, successfully putting their interest in capitalising on the potential growth of exporting pick-up vehicles (light-duty trucks with an enclosed cab and an open cargo space) to Africa into motion.

He says Nissan will continue to develop the one-ton pick-up range.

Meanwhile, Whitfield says South Africa must develop better trade cooperation with the West. At the moment, South Africa’s largest trading partner is Germany, followed by the US. Trade to these and other Western nations is governed by different forms of trade agreements, which South Africa could use more effectively to benefit both export volumes and the country’s balance of trade.

“It is imperative to invest in long-term sustainability and in the ways through which both regions can participate and optimise trade cooperation together,” he says.

Trends
Recent market research conducted by Nissan in South Africa reveals that more than 40% of first-time buyers of pick-ups are interested in the hatchbacks, whereas about 46% are new to the segment.

As hatchbacks are the most popular passenger vehicle shape, this research shows that pick-ups have become, along with sports utility vehicles, the most popular vehicle type for owners looking to progress from a passenger vehicle to something larger. Put differently, owners upgrade from a B- or C- segment hatchback to a pick-up, rather than buy a D-segment sedan or more expensive C-segment hatchback or sedan.

Whitfield points out that, while pick-up truck sales are often presented as a proxy for the buoyancy of the business sector, the relative health of the segment reflects that it is attracting buyers from segments of the market that do not explain that fairly well-established link.

Research trends point, in fact, to traditional pick-up buyers, especially those in the double cab and sub-one-ton markets, being close to being overtaken by leisure buyers.

In short, pick-up sales are growing at the expense of passenger vehicle sales, he highlights. “This might seem counterintuitive, but buyers are moving from the most popular passenger vehicle shape – a hatchback – to a pick-up,” says Whitfield.

The research also indicates that, functionality and form are equally considered, adding that, while many respondents highlight the practical benefits of owning a pick-up, they also praise a pick-up’s more rugged appearance and on-road presence.

Another trend is that men dominate the buyers market regarding pick-up vehicles, as they account for more than 75% of private purchases, says Whitfield, which is not a new development.

In addition, he mentions that recent reports by industry stalwart and car parts price guru Malcolm Kinsey, point out that pick-ups remain a cost-effective option to service and repair. “Kinsey shows that Nissan has this market perfectly figured out, with its range of sub-one-ton and one-ton pick-ups the easiest on your pocket.”

Whitfield concludes that new pick-up buyers are more focused on the vehicle’s features. “Unlike the traditional pick-up owner, new buyers in this segment are placing a far greater emphasis on style and comfort, since new buyers compare their new purchase with their previous passenger vehicle.”