Sales of SUVs — sports utility vehicles — may be plummeting in markets such as the United States and United Kingdom as higher fuel prices begin to bite, but not in South Africa, where sales are at record levels.
From more than 2Â 000 units sold in August 2004 there has been a gradual upsurge in the sales recorded to a two-year high of mroe than 3 600 units in March of this year. The second quarter has seen sales hover around the 3Â 000-units mark. The month of July recorded 3 151 sales.
Figures show a 5,5% year-on-year increase. This is less spectacular than the 35% sales growth recorded in small vehicles during 2005, but against the trend in the US where General Motors is scaling down SUV and truck production and in the UK where SUV sales are falling for the first time in years.
Nico Vermeulen of the National Association of Automobile Manufacturers of South Africa said one of the reasons that the local SUV market has done so well is that “on balance SUVs are more fuel-efficient”.
He explained that most of the SUVs on South Africa’s roads are sourced in Europe and Japan, where fuel-efficiency technology is widely used because of the high taxation on fuel. This makes fuel very expensive in Europe. Prices can be up to R15 a litre. He also pointed out that fuel-efficient diesel SUVs are not as common in the US as they are in Europe and South Africa.
Danelee van Dyk, an economist at Standard Bank, said the SUV market has “indeed performed phenomenally on the back of rising individual wealth, depicted by strong growth in asset prices, low interest rates and solid growth in disposable income”. However, she pointed out that sales of SUVs are not as bouyant as other segments in the vehicle market. “As in the case of international markets, surging fuel prices have weighed on demand of SUVs however, sustained demand for the luxury of a premium-class vehicle is mainly noticed in the upper end of the medium to high-income groups,” Van Dyk said.
Van Dyk explained that this market has been “proliferated by more South Africans chasing the wild outdoors and the sheer fashion accessory that SUVs have become”. Demand has also been shored up and sustained by the introduction of fuel-efficient diesel models. “Longer-term risks to sustained buoyancy in this market include the introduction of transport policies, in the form of a financial tax, aimed at reducing the impact of growing car use, particularly the use of fuel-guzzling 4×4 vehicles,” she said.
Tim Hendon, product communications manager at General Motors South Africa, said another interest rate and fuel-price hike may see demand of cars, in general, slowing down marginally. For now, there are slight indications that the foot is being taken off the pedal.