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SA car industry: Demand for new vehicles plummet

2016-08-02 08:02

ANOTHER DROP IN SALES: The National Association of Automobile Manufacturers of South Africa (Naamsa) has reported a huge decline in new vehicle sales in July 2016. Image: iStock

Johannesburg - South Africa’s new vehicle industry saw sales plummet 17% in July 2016, reports the National Association of Automobile Manufacturers of South Africa (Naamsa).

Naamsa reports 44 883 new vehicles were sold in July 2016, a decline of 9222 vehicles compared to the same period in 2015.

Passenger cars fell 20.6% year-on-year. Sales of Light Commercial Vehicles (LCVs) saw overall sales slumping 9.9%, year-on-year. The total industry’s year-to-date performance, as of July, sees the market drop 11%.

Dismal market

Aggregate industry export sales at 29 042 for July, 2016 reflected a marginal improvement of 684 vehicles or an increase of 2.4% compared to the 28 358 vehicles exported in July 2016.

SA vehicle sales (July 2016)

Overall, out of the total reported Industry sales of 44 883 vehicles, an estimated 36 947 units or 82.3% represented dealer sales, 13,1% represented sales to the vehicle rental industry, 3% represented industry corporate fleet sales and 1.6% sales to government.

Passenger market

The new car market experienced severe pressure during July, 2016 and at 29 007 units reflected a decline of 7520 cars or a fall of 20.6% compared to the 36 527 new cars sold in July 2016.

READ: SA's top 10 best-selling cars - July 2016

This was again despite a strong contribution by the car rental industry which had accounted for 18.5% of new cars sold during the month. Margins at auto industry retail/dealer level also remained under pressure.

LCV sales

Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 13 575 units during July, 2016 reflected a decline of 1 490 units or a fall of 9,9% compared to the 15 065 light commercial vehicles sold during the corresponding month last year.

READ: Best-selling bakkies in SA - Hilux remains on top

Grim outlook

Domestically, based on the industry’s general outlook and prevailing macro-economic conditions, the balance of 2016 was likely to continue to be characterised by low economic growth and increased pressure on consumers’ disposable income.

Double digit new vehicle price increases in response to earlier Rand weakness, relatively high interest rates and fragile consumer and business confidence at a time of rising retrenchments across a number of sectors – would put further downward pressure on sales of new vehicles.

The lower levels of new vehicle sales represented a reflection of current difficult economic conditions in South Africa. The decline in the Reserve Bank’s leading business cycle indicator to 90.8 in May from 90.9 in April took the index to its lowest level since the 2008 global financial crisis.

The decline reinforced the recent decision by global financial institutions and the Reserve Bank to revise downwards South Africa’s growth outlook for 2016 and 2017. The decline in the latest Purchasing Managers Index also did not augur well for short to medium terms prospects. One positive feature was the imminent significant reduction in the price of fuel.

In contrast, export sales were expected to show modest upward momentum over the balance of the year. New vehicle industry production should therefore hold steady with 2016 export sales numbers expected to expand to around 351 000 units from the 333 802 export sales in 2015.


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