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It’s been a battle fought out on the capricious terrain of consumers’ partialities. Volkswagen’s long-time ambition to clamber to top spot in the South African automotive market ahead of arch-rival Toyota is becoming a more palpable possibility after the devastating earthquake and tsunami in Toyota’s home country Japan and a clever market positioning strategy by VWSA.
Pulling Toyota down are shortages of parts and assembled vehicle imports to SA following the post-tsunami shutdowns at its plants in Japan. Those facilities are set to reopen mid-month but will be running at just 50% of their optimal output levels. Back home, Toyota South Africa Motors’ (TSAM) Prospecton Plant in Durban will reopen after its annual Easter break but chances are it won’t be operating at 100%, says spokesman Leo Kok. Local production will probably be hampered by shortages of certain components – most likely those sourced from third party suppliers in Japan or those sent to SA for final assembly. TSAM imports 40% of its components, says Kok.
The bottom line is Toyota will lose out on both production and sales in SA. Prospecton builds three of SA’s best selling vehicles: the Corolla sedan, the Fortuner SUV and the Hilux bakkie, the last-mentioned being SA’s top selling vehicle in the light commercial segment. TSAM sold 3 767 Hilux bakkies in March against the 456 Amarok bakkies VWSA moved in the same month.
But passenger vehicles are where VW shines. Though obviously not affected by production stoppages in Japan, it was quick to understand where growth in the car market would stem from in a post-recession SA and responded rapidly with its Polo Vivo, whose combination of a R104 000 price tag and trusted Polo brand made the endeavour a success. The Vivo has been SA’s number one selling passenger car since its launch in March last year.
On the other hand, Toyota dithered, battling its own demons in the form of quality problems and product call backs that wreaked havoc on the group’s reputation last year. Its Yaris had priced itself out of the entry level segment and no suitable alternative to the now-discontinued Tazz was forthcoming over the 2009/2010 period when the rest of the leaner post-recession car makers aimed their assault on that fast-growing segment. TSAM finally entered the market last month with its Aygo – a small hatch that starts retailing at R109 900.
“It’s a small city car and will be a bigger threat to some of the other vehicles in the segment such as imports from South Korea,” says Matt Gennrich, communications GM at VWSA. “But we’re taking all competitors very seriously.” The question is whether the Aygo may be a tad late in taking full advantage of the upswing in car sales, which surprised the industry last year and a strong 22,2% sales growth in first quarter 2011, according to monthly figures by the National Association of Automobile Manufacturers SA (Naamsa).
The momentum is unlikely to be sustained at 20% plus levels, despite the overall diagnosis for the year looking good. SA’s economy is expected to grow by 3,5% this year, according to the widely held market consensus, but that rate makes any major expansion of car buying population improbable. VWSA has the first mover advantage thanks to its Vivo and is initiating sales of the Argentina-made Amarok single cab model mid-year, which will probably take some market share away from Toyota.
“We’ll take any opportunity to gain market share, but our Amarok production is finite so we can’t fill all the gaps left by any potential Toyota Hilux immediately,” says Gennrich. “However, our intention is eventually to also be the number one in commercial sales.”
How important is being number one to Toyota? “We’ve been the market leader for 31 years,” says Calvyn Hamman, senior vice-president at TSAM. “It’s very important to us. We see it as a sign from our customers and it’s too early to say whether we’ll lose that spot. If it comes at the price of quality we aren’t interested.”
Pulling Toyota down are shortages of parts and assembled vehicle imports to SA following the post-tsunami shutdowns at its plants in Japan. Those facilities are set to reopen mid-month but will be running at just 50% of their optimal output levels. Back home, Toyota South Africa Motors’ (TSAM) Prospecton Plant in Durban will reopen after its annual Easter break but chances are it won’t be operating at 100%, says spokesman Leo Kok. Local production will probably be hampered by shortages of certain components – most likely those sourced from third party suppliers in Japan or those sent to SA for final assembly. TSAM imports 40% of its components, says Kok.
The bottom line is Toyota will lose out on both production and sales in SA. Prospecton builds three of SA’s best selling vehicles: the Corolla sedan, the Fortuner SUV and the Hilux bakkie, the last-mentioned being SA’s top selling vehicle in the light commercial segment. TSAM sold 3 767 Hilux bakkies in March against the 456 Amarok bakkies VWSA moved in the same month.
But passenger vehicles are where VW shines. Though obviously not affected by production stoppages in Japan, it was quick to understand where growth in the car market would stem from in a post-recession SA and responded rapidly with its Polo Vivo, whose combination of a R104 000 price tag and trusted Polo brand made the endeavour a success. The Vivo has been SA’s number one selling passenger car since its launch in March last year.
On the other hand, Toyota dithered, battling its own demons in the form of quality problems and product call backs that wreaked havoc on the group’s reputation last year. Its Yaris had priced itself out of the entry level segment and no suitable alternative to the now-discontinued Tazz was forthcoming over the 2009/2010 period when the rest of the leaner post-recession car makers aimed their assault on that fast-growing segment. TSAM finally entered the market last month with its Aygo – a small hatch that starts retailing at R109 900.
“It’s a small city car and will be a bigger threat to some of the other vehicles in the segment such as imports from South Korea,” says Matt Gennrich, communications GM at VWSA. “But we’re taking all competitors very seriously.” The question is whether the Aygo may be a tad late in taking full advantage of the upswing in car sales, which surprised the industry last year and a strong 22,2% sales growth in first quarter 2011, according to monthly figures by the National Association of Automobile Manufacturers SA (Naamsa).
The momentum is unlikely to be sustained at 20% plus levels, despite the overall diagnosis for the year looking good. SA’s economy is expected to grow by 3,5% this year, according to the widely held market consensus, but that rate makes any major expansion of car buying population improbable. VWSA has the first mover advantage thanks to its Vivo and is initiating sales of the Argentina-made Amarok single cab model mid-year, which will probably take some market share away from Toyota.
“We’ll take any opportunity to gain market share, but our Amarok production is finite so we can’t fill all the gaps left by any potential Toyota Hilux immediately,” says Gennrich. “However, our intention is eventually to also be the number one in commercial sales.”
How important is being number one to Toyota? “We’ve been the market leader for 31 years,” says Calvyn Hamman, senior vice-president at TSAM. “It’s very important to us. We see it as a sign from our customers and it’s too early to say whether we’ll lose that spot. If it comes at the price of quality we aren’t interested.”
