BMI's Executive Summary

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Rising interest rates had a crippling effect on the South African car market in 2007, with the double-digit sales growth seen in recent years wiped out due to the rising cost of borrowing, mounting household debt, rising car prices and the tightening of the credit law in June, according to BMI's latest South Africa Automotive Report.

Despite the downturn in car sales, demand for commercial vehicles is being sustained at high levels of growth and shows the segment is robust over the medium-term. In the light of trends observed in the first three quarters, BMI estimates that total vehicle sales amounted to 658,197 units in 2007, a fall of 4.6% yo- y, with car sales falling 10.0% and commercial vehicle sales growing 6.4%. The 2010 Football World Cup will have a positive impact on the automotive market, with car rental fleets expanded to cater for demand and infrastructural developments spurring demand for trucks. In 2009 and 2010, car sales should grow by 10% annually while commercial vehicle sales growth should average 8.8%. There will be some market correction in 2011, but by 2012 the automotive market should see sales approach 860,000 units, up 26.1% over 2007 levels.

The downturn in sales is threatening the future of many of South Africa's car dealers. The National Automobile Dealers' Association (NADA) claims that the effects of the downturn are worse than depicted in overall sales statistics, which it claims are skewed by sales to car rental companies, corporate fleets and the government. Retail sales through dealerships were far worse, with Q307 the worst performing quarter since 2004. Franchise dealers for the less popular brands are struggling and BMI expects significant rationalisation by mid-2008. Retail sales are also unlikely to improve from 2009, despite the uptick in overall sales, which is related to an increase in fleet purchases.

Automotive manufacturing output has been hit by strike action in the components sector in H207, leading to a decline in vehicle production levels and exports of 43.4% year-on-year (y-o-y) in September. The disruption to production compounded problems with the automotive sector, which has become increasingly reliant on exports due to the slump in domestic demand. Imported vehicles benefited from a strong rand in 2007, which made them more competitive on the local market, thereby further depressing demand for cars manufactured in South Africa. There is also ongoing uncertainty over changes to the Motor Industry Development Plan (MIDP), with the government's planned announcement delayed by months. Nevertheless, some carmakers appear to be optimistic. In November 2007, Renault announced that it would start production of the entry-level Sandero model in Rosslyn in Q109. Meanwhile, Nissan Diesel South Africa is planning an expansion of its production capacity in order to take advantage of growth in the country's commercial vehicle segment. The company is investing ZAR10.9mn in upgrading the Rosslyn plant, which will expand the building and add new equipment, including a machine for inverting chassis to improve access and increase efficiency.

Contents

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Chapter 1 – SWOT Analysis

South Africa Autos Industry SWOT

South Africa Economic SWOT

South Africa Business Environment SWOT

Chapter 2 – Middle East and Africa Overview

Table: Middle East and Africa Autos Production – Historical Data & Forecasts (CBUs unless otherwise stated)

Table: Middle East and Africa Autos Sales – Historical Data & Forecasts (CBUs unless otherwise stated)

Suppliers

Table: Africa Autos Sales 2005 By Segment

Table: Middle East Autos Sales 2005 By Segment

Chapter 3 – Business Environment Rankings

Economics – Long-term Risk

Politics – Long-term Risk

CBU Output Growth

Vehicle Ownership/Penetration Potential

Regulation

Competitive Environment

Chapter 4 – Industry Forecast Scenario

Production And Sales

Table: South Africa – Historical Data & Forecasts

Exports

Table: South Africa Autos Sector – Historical Data & Forecasts (CBUs unless otherwise stated)

Chapter 5 – Macroeconomic Forecast Scenario

Table: Economic Indicators

Country Snapshot: South Africa Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 6 – Special Focus: Commercial Vehicles

Regional Market Overview

Table: Regional Commercial Vehicle Market: Country Ranking, Sales

Table: Regional Commercial Vehicle Market: Country Ranking, Production

Table: Regional Commercial Vehicle Market: Company ranking of significant regional manufacturers

Table: Recent and Planned Investments in the Middle East and Africa

South Africa Commercial Vehicles Sector

Sales

Table: Size of Commercial Vehicle Market

Table: Commercial Vehicle Market Forecast: South Africa

Table: South Africa Light Commercial Vehicle Sales – March 2006

Table: South Africa Medium Commercial Vehicle Sales – March 2006

Table: South Africa Heavy Commercial Vehicle Sales – March 2006

Table: South Africa Bus Sales (over 8.5t) – March 2006

Production

Table: Production in South Africa

Table: Production Forecasts for South Africa

Chapter 7 – Competitive Landscape

Table: South Africa New Vehicle Sales – July 2006

Vehicle Parts and Components

Government Regulation and Policy

Chapter 8 – Company Monitor

Regional Case Study: Ford

Sales

Table: Ford dealers in Middle East and Africa

Production

Table: Ford assembly plants in the Middle East and Africa

Company Profiles

Toyota South Africa

DaimlerChrysler – South Africa

MAN Truck and Bus (South Africa)

Volkswagen

General Motors SA

Nissan

Ford

BMI Forecast Modelling

Automobile Industry

Sources

Appendix: Regional Demographic Data

Table: The Long View: Data Over The Economic Cycle (2000-2007)

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Middle Eastern Automotives: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Automotive Sources

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BMI's Middle Eastern Automotives Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: