Market proves buoyant
FLEET sales, along with overall vehicle sales, dropped significantly during 2008-09 and sales only started picking up again in 2010.
Stanley Anderson, Hyundai marketing director, says sales continued to improve this year.
“There was an increase in total passenger car and light commercial vehicles sales of about 20% in 2010 compared to 2009, and there was a similar increase in 2011. We are seeing a 12% increase in sales in the year to date.”
He says the market is proving buoyant and demand is stronger than industry players expected at the beginning of the year.
“At the start of the year, predictions were for growth of 6%-8% over last year’s figures but we are well ahead of that,” says Anderson.
He says the fleet vehicle market has several major components including major corporations, car rental companies, small and medium-sized companies and full maintenance lease companies.
While some of the major accounts are negotiated directly, a significant percentage of overall sales are carried out by the dealer network.
“Fleets include different types of vehicle that range from company cars to commercial vehicles such as trucks and light delivery vehicles.
“In addition, we tender to the government once a year and orders are then placed on the basis of that agreement as vehicles are needed,” says Anderson.
He says demand for minibuses has been strong, both from the people carriers as well as other vehicles in the range that are converted into ambulances.
“Demand from corporations tends to keep the market ticking over, even during tough economic times, as they tend to have three- or four-year, 150,000km/200,000km replacement cycles to which most adhere,” says Anderson.
“Provided they have the same level of business, they will replace all their vehicles as they fall due, otherwise maintenance costs begin to outweigh the cost of replacing the vehicle.
“However, if business is down, vehicles may do less mileage and the replacement cycle will, therefore, be extended and take the vehicle into a fifth or even a sixth year. Even when fleet managers opt to extend vehicles’ fleet life, they know the point at which the benefits of retaining a vehicle are outweighed by the costs and they will replace it when that point is reached.”
He says rental companies are even less flexible than corporations and they tend to replace on the basis of one year or 40,000km.
“Very few rental companies will consider extending the vehicle’s life beyond this point as they compete with each other on the basis of giving customers good quality vehicles,” says Anderson.
He says the rental companies make up a significant slice of the fleet market with about 40,00050,000 units a year. In addition, the rental companies buy across a fairly broad cross-section of classes to fit in with the rental bands they offer to clients.
“They buy from entry level to luxury vehicles and in terms of features the norm has become airconditioning and power steering even at the lower levels. The rental car market is feature driven in terms of which categories vehicles are placed in,” he says.