See-sawing between hope and despair – Toyota SA predicts 21% growth in new vehicle sales

The interior of the new Toyota Cross.

By Melinda Ferguson

28 Jan 2021

Toyota South Africa Motors’ annual State of the Motoring Industry event cast both a bleak and guardedly hopeful 2021 outlook, after a year in which Covid-19 played havoc with the global and local automotive industry.

Dogged by technical issues beyond its control, Toyota South Africa Motors’ SOMI (State of the Motoring Industry) event was delayed on Thursday by more than an hour as Gauteng weather played havoc with the virtual broadcast of its annual report back on Toyota’s performance on the SA motoring front.

Over the past four years, I’ve attended all of these live events in Johannesburg, usually a time to catch up face to face with colleagues and chat about industry issues and upcoming launches. On Thursday, as more than 150 motoring media and Toyota industry players sat scattered across the country, behind screens, it seemed eerily appropriate that a total breakdown of comms was perhaps the most accurate reflection of the dire state that the SA motoring industry finds itself in, due to the continued economic fallout caused by the pandemic.

Andrew Kirby, president and CEO of Toyota South Africa Motors, presents Toyota's State of the Motoring Industry event on Thursday.

When we finally got back online, Andrew Kirby, president and CEO of Toyota South Africa Motors (TSAM), summed it up in his opening statement: “It’s been a tough, tough year.”

It’s no surprise that after a torrid year of global Covid-19 lockdowns, illness, deaths and economic fallout, South Africa’s top-selling manufacturer, Toyota, has had a bleak year with just over 380,000 units sold in 2020, a 29% drop from 2019. However, Kirby stressed that for perspective, the SA auto industry had been in a downward spiral since 2013

“The last time our vehicle sales dipped under 400,000 in South Africa was in 2009 when we were in recession amid the global financial crisis. Just like Covid-19, the Great Recession of 2008 spurred an economic meltdown that caused business closures, high unemployment, stagnating commerce as well as great uncertainty.

“While we believe that some lessons learnt from the Great Recession can provide some direction to recovery, we also realise that the path may take a very different turn and that the time span may be even longer.”

Clearly the pandemic, which sees no signs of letting up, has played havoc with consumers, creating ballooning debt and job losses while negatively affecting spending confidence, accelerating the downward spiral in vehicle sales at an unprecedented speed.

In the first three months of 2020, before lockdown, there was already a 20% decline in the market. During the first three months of lockdown, numbers plummeted by 60% as SA went into various levels of hard lockdown.

By December 2020, an almost miraculous recovery was recorded by Toyota where sales year on year showed a relatively positive 10% decline. (If Toyota is feeling the burn, one has to wonder how the likes of the more niche brands like Peugeot, Alfa and Citroën have been compromised.)

On a more upbeat note, a number of trends emerged over the past year for TSAM that have elicited rays of hope against the bleak Covid-19 landscape.

There was an unexpected growth for Toyota in the SUV B and C segments, despite Covid-19 challenges.

“We didn’t expect the recovery to be as quick and we didn’t expect our share in the SUV segment to increase like it did,” said Kirby.

While the hatchback and sedan segment was the hardest hit in 2020 and the premium segment declined by a whopping 32%, the Heavy Commercial Vehicle segment showed a relatively modest decline of 17%.

And despite the overall passenger car segment being hardest hit, Toyota still managed to show positive growth, with new products like the affordable Starlet selling more than 1,000 units a month. The 2020 Fortuner performed beyond expectations, selling in excess of 1,200 units a month, while claiming more than 57% of market share. The Hilux, the company’s star volume bakkie seller, outperformed itself with record sales in September of almost 4,500 units.

The million-dollar question of course is: how is 2021 going to pan out for Toyota?

“It’s very difficult to predict,” says Kirby. “At this stage, we are forecasting a 21% upward growth, compared to sales in 2020, although that’s still 14% down from 2019.”

However, Kirby reiterated that due to the volatility in the market, there may be a situation in three months’ time where those figures need to be revised.

Of the 460,000 vehicles that Toyota hopes to sell in 2021, Kirby predicts that 285,200 will be passenger car sales, 151,800 Light Commercial Vehicles, with 23,000 sales in the medium and heavy commercial vehicle segment.

The interior of the new Toyota Cross.

The webinar ended on a relatively high note with the announcement of plans for a brand new Corolla Cross, to be manufactured in SA, alongside the locally produced Corolla Quest, at the Prospecton plant in Durban. The new Cross is set to roll off the production line in October and will be available in the South African and African markets. This is a significant investment into the local industry of around R2.3-billion and will create in excess of 1,500 jobs.

And then the signal once again got shaky and my screen froze. It looks like it’s going to be a tough, tough year. But we live in hope. DM

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