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Cape Town - New vehicle sales in February continued the decline started in January 2016, reports the National Association of Automobile Manufacturers of SA (Naamsa).
Total industry sales declined 8.1%, year-on-year, with 48 148 new vehicles sold. Year-to-date, the market has receded by 7.6%.
Drop in car, bakkie sales
Passenger car sales fell 6.1% (32 825 cars) while Light Commercial Vehicles (LCVs) tumbled 13.1% with only 13 161 new vehicles sold in this segment.
Combined sales for the remainder of the commercial vehicle segment were down 5.8% and also reflected a weaker market, although sales of extra-heavy commercial vehicles and buses saw slight year-on-year growth.
Vehicle finance specialists Wesbank reports that sales through the dealer channel continued to wane, dropping 9.5%, year-on-year. As in January, the rental market grew and February saw year-on-year growth of 34% in this channel.
Drop in SA car sales: outlook for 2016 is 'uninspiring'
Rudolf Mahoney, Wesbank head of brand and communications, said: "February’s decline in the market is not unexpected, and we expect that this will continue to be the trend for the remainder of 2016.
“Once again, strong sales in the rental market helped mitigate the overall effect of the decline, and this is likely due to rental companies re-fleeting ahead of the March price increases.
"This growth comes off 2015’s low base, which saw rental sales decline 18% for the year."
Top 3 selling vehicles
What about vehicle exports?
Industry new vehicle exports during February 2016 had registered a small decline compared to the corresponding month last year. Increases in new vehicle exports are expected to materialise from March/April 2016 on the back of the anticipated contribution by Hilux light commercials with the resumption of export sales with effect from March, 2016 into Africa and from mid-2016 to Europe, reports Naamsa.
Naamsa said: "Domestically, given the difficult economic environment and low GDP growth prospects, the reality of well above inflation new vehicle price increases and expectations of further interest rate hikes – the outlook for 2016 in terms of domestic new vehicle sales remained constrained.
"At this stage, the consumer demand sensitive new car market was anticipated to decline by around 9% in volume terms to about 375 000 units in 2016 down from the 412 826 new cars sold in 2015. New commercial vehicle sales were expected to perform slightly better with a decline of around 5% in volume terms."
Used car market rising
While new vehicle sales struggled consumers continued to flock to the used car market. WesBank’s data shows growth of 11.8% in finance applications for pre-owned vehicles.
By contrast, growth in applications for new cars was relatively flat at 0.46%.
The decline in demand for new vehicles has been fuelled by a number of factors, including January’s more aggressive interest rate hike of 50bps, new car price inflation that continues to outperform CPI, and low levels of consumer and business confidence, reports Wesbank.
These and other macroeconomic factors are putting consumer budgets under increasing pressure.
Mahoney said: "January and February’s sales figures set a clear tone for this year’s new vehicle market.
"This is the start of a shift in buying patterns and we anticipate that consumers will start to buy down in the new vehicle market, or exit it altogether and opt to look for better value in the used car market."
Any advice for car buyers?
WesBank advises prospective car buyers to budget carefully and plan for all mobility costs. With interest rates and new car prices on the rise, and set for increase throughout the year, monthly repayments will be higher than usual. This is likely to have an effect on insurance premiums.
Fuel prices will rise to accommodate an increased fuel levy, thus negating some of the recent price decreases. Oil prices are unlikely to decline further, so any depreciation of the Rand is bound to result in fuel price increases.