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New vehicle sales down on June 2013

2014-07-02 08:25

'FACING HEADWINDS: There were fewer images such at this in South African car showrooms during June 2014 - and the future isn't rosy either. Image: Shutterstock

JOHANNESBURG, Gauteng – Sales of new vehicles in South Africa fell by 2.3% through June 2014 compared to the same month in 2013.

The National Association of Automobile Manufacturers of SA (Naamsa) reported on Tuesday that the total of 52 837 showed a decline of 1251 while June 2014’s export sales (24 024) were down marginally (195 or 0.8%).

Naamsa believed, however, that the domestic market showed some resilience despite slow economic growth, high levels of strike activity, rising inflation and exchange-rate vulnerability.

‘FACING HEADWINDS’

A Naamsa spokesperson said, rather creatively, that the SA market was still expecting "headwinds" over the short- to medium-term – a sharp contrast to growing sales in China, the US and Europe.

"However,” the spokesperson added more cheerfully, “the continued improvement in global economic conditions will benefit SA vehicle exports during the second half of 2014 and in 2015.”

Out of SA sales reported in June, 83.8% were through dealers, 8.3% went to the rental industry, 4.4% to corporate fleets and 3.5% to the state. New car sales reached 35 355 – down 5.4% on the previous June – while light commercials, bakkies and mini-buses reached 14 556,  an increase of 4.5%.

AND NOW ANOTHER STRIKE

Naamsa said: "South Africa urgently needed stronger growth, faster employment creation and a narrowing of the current account and fiscal deficits. The restoration of and improvement to domestic and foreign investor confidence is necessary for this."

The strike in the steel and engineering industry which began on Tuesday (July 1) would further undermine investment sentiment and, if prolonged, increase the risk of South Africa entering a recession.

"The impact on vehicle production and exports will start to be felt if the industrial action continues beyond two weeks; the outlook for the automotive sector for the balance of 2014 was mixed."

Domestic sales would continue to be affected by general economic conditions, exchange rate-linked new vehicle price increases and upward pressure on interest rates.

"The domestic market is likely to register a decline, in volume terms, of about five percent compared to 2013 with the main impact in the new car and light commercial vehicle sectors."

Sales of heavy and extra-heavy trucks were expected to continue to hold up well. In the case of exports, further improvement was anticipated during the second half of 2014 on the back of better global economic growth.
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