Toyota Motors South Africa (TMSA) CEO Andrew Kirby said yesterday that South Africa was seen as a very competitive car market as evidenced by the number of new entrants that entered the market last year.
Kirby said South Africa was becoming one of the most competitive markets in the world in terms of the number of derivatives, models and brands compared to the total size of the market.
Kirby was talking at a TMSA event yesterday, which was hosting the seventh instalment of the State of the Motor Industry (Somi) report.
He said there was a 65% increase in new energy vehicle sales sold in South Africa in 2023 compared to 2022, with most of them being battery electric vehicles (BEV).
“The total volumes are still fairly small, but the trajectory is quite interesting. So from 40 models, we now have 66 models, hybrids making up the majority of new engine vehicle sales at 84%, 4% plug-in hybrids, and 12% battery electric vehicles,” Kirby said.
“And if we look at the percentage increases, the biggest increase in the number of models is actually plug-in hybrids. So plug-in hybrids going from eight to 17, followed by battery electric from 17 to 31, and hybrids from 15 to 18 models.
“So substantial change in the market. And if we keep going this trajectory, it’s gonna be interesting to see what the next five years will look like.”
TMSA said the South African market would likely be buoyed by low-base effects and the continued arrival of various models of new energy vehicles (EVs).
The Somi report was released at a time when South Africa’s automotive industry has remained cautiously optimistic that elevated interest rates will not prevent new vehicle sales volumes from surging above pre-pandemic levels in 2024 following a disappointing year in 2023.
The new vehicle market’s prolonged recovery from the Covid-19 pandemic stuttered towards the second half of 2023, following two previous years of sound rebound.
The market was well on track to recover to the pre-pandemic level of 2019, but new vehicle sales were undermined by pressure from major logistical challenges at the country’s ports towards year-end.
New vehicle sales in 2023 increased by only 0.5% year-on-year to 532 098 units compared with the 529 556 units sold in 2022 amid a depressed economy, elevated cost of living increases and power outages.
Kirby said interest rates stayed high for all of 2023 as inflation was high, while structural issues such as logistics bottlenecks and load shedding also compounded the challenges.
He said the 532 098 cars sold last year were well below the forecast he had given around this time a year ago, but the volume was 0.5% larger than 2022 and represented four years of growth.
“But we need to keep this in perspective. It’s still a fairly soft market compared to what we’ve experienced in the last 10 years, over 600 even over 700 000. It’s a good way to go,” Kirby said.
“And quite honestly, in the first quarter of 2023, we were still on track for 570 000 units.”
Toyota was hosting its annual State of the Motor Industry (SOMI) where it announced that it broke all sales records at over 142 612 total vehicles in southern Africa.
However, the overall passenger segment vehicles manufactured in South Africa has declined by 1% compared to 2019.
Currently, 24% of all passenger cars sold in South Africa are sourced in South Africa.
However, India now makes up 42% of all vehicles sold in South Africa – up from 28% in 2022 – with 44 models, while China has grown from a 3% share of the imported market to 9% over the last five years, from 10 to 15 models.
There has also been a little decline in the vehicles sourced from Germany, Japan and South Korea.
Automotive Business Council CEO Mikel Mabasa echoed Kirby’s sentiments about 2023 being a tough year, but said they were “very cautiously optimistic” that 2024 was going to be a better year than the last.
“Our outlook for this year is not as down as Andrew’s, who is projecting 540 000. We are currently at around 565 000, which we think is an achievable number,” Mabasa said.
“We are going to rally quite a number of activities to also be able to stimulate the demand for vehicles. And also, when you look at new energy vehicles, we know for an example that a lot of brands are introducing new products this year.
“The last count was at the end of last year. We were looking at about 11 new different models that are going to come into South Africa.
“Since the current fleet of EVs that we have are still at a premium level, we really want to start seeing more of your entry-level models coming into the market so that we can socialise this technology.
“We are very optimistic because at least as more brands are introduced in the market, it will also help those customers who are still brand loyal to their brands because those brands will be introducing products in that category or segment of the market.”
BUSINESS REPORT