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Weak end to '09 car sales

2010-01-08 12:05
New vehicle sales ended 2009 on a relatively weak note, the National Association of Automobile Manufacturers (Naamsa) said on Friday.

"December monthly sales are normally the lowest in any calendar year," Naamsa added in a statement.

It said that aggregate new vehicle sales during December 2009 stood at 30 478 vehicles - a decline of 2 347 vehicles or 7.2%. This is compared to the total new vehicle sales of 32 825 units in December 2008.

On a market segment basis, vehicle sales during December 2009 (excluding the sales of light commercials, buses and Amalgamated Motor Holdings sales) registered sharp declines in every segment compared to December 2008.

Turning to 2009 as a whole, Naamsa said new vehicle sales had declined sharply in every sector.

Industry aggregate sales had declined by 138,157 units or 25.9% to 395 230 vehicles compared to the 533 387 units sold during 2008.

"This represents the lowest industry annual sales level since 2003 and underlines the disproportionately severe impact of the three-and-a-half-year recession on the domestic market, compounded by the shock to the South African economy of the global financial and economic crisis," Naamsa said.

It added that the extent and severity of the downturn in domestic new vehicle sales was reflected in the fact that from the record sales in 2006, aggregate sales by 2009 had declined by 319 085 units or 44.7%.

43% dip since 2007

New, combined commercial vehicle sales had peaked in 2007 and had, over the two years since, fallen by over 104 000 units or 43.2%.
According to Naamsa, new car and commercial vehicle sales had domestically, since the middle of 2009, started to show signs of bottoming out - albeit at historically low levels. 

"During 2009, as had been the case throughout 2008, most sectors of the South African automotive industry continued to be  confronted with severe profitability and sustainability challenges.

"Pressure on automotive dealers over the past two years has been particularly intense resulting in a number of dealer closures and associated employment losses."

Naamsa added that the parts production sector had also been confronted by severe viability challenges as a result of significantly lower levels of production for both the domestic and export markets.

"A number of component manufacturing companies ceased operations resulting in additional job losses," Naamsa said.


During 2009, vehicle manufacturers and importers were also forced to restructure their operations in response to the lower sales domestically and internationally.

"Fortunately, domestic sales trends during the second half of 2009 suggested that the industry is beginning to emerge from the extremely severe downturn which had started mid-2006."

Naamsa said that at the same time, there were indications, from the third quarter 2009 onwards, of a revival in demand for motor vehicles in international markets as a result of the global economic recovery and focused demand stimulation measures.

"The improvement in export sales over the last four months of 2009 provided much-needed support to vehicle producers and auto parts suppliers," it said.

Overall during 2009, industry trading conditions remained intensely competitive with margins under continued pressure.

"Initial calculations suggest that motor industry new vehicle related sales turnover declined by about 20% during the year.

"In contrast, improved momentum in the used vehicle market which had probably risen by about 15% to over 600 000 units provided some relief to the automotive retail and distributive trade."

Naamsa said the impact of the global financial and economic crisis was reflected in the downturn in new vehicle exports in 2009 which, in aggregate terms, at 174 952 vehicle exports, fell by 109 259 units exported or 38.4% from the 284 211 units exported in 2008.

Looking at the international environment and prospects for 2010, Naamsa said clear signs had emerged of a revival in demand for South African produced motor vehicles in international markets.

Rebrand needed

"South Africa has established itself in recent years as a reliable manufacturer and supplier of high quality vehicles and automotive components to world markets.

"However, within the context of substantial production over-capacity world-wide, South Africa needs to brand itself as an attractive production hub for niche vehicle platforms."

Assisted by predictable and stable industrial policy and the impending Automotive Production and Development Programme with its focus on local value addition, the South African vehicle manufacturing industry was in a relatively good position to grow production and exports in future years, Naamsa said.

"Assuming continued recovery in international markets, current indications are that the number of vehicles likely to be exported by the industry during 2010 could improve by some 56 000 vehicles or 32% over the 2009 figures principally to the major markets in the European Union, Japan and the United States.

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