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SA's new vehicle sales: Huge slump in April 2017

2017-05-02 19:24

MASSIVE DROP: Naamsa recorded a drop in new vehicle sales during April 2017. Image: iStock

Cape Town - New vehicle sales in all segments, with the exception of medium commercial vehicles, deteriorated sharply during April 2017, registering double digit declines, reports National Association of Automobile Manufacturers of South Africa (Naamsa).

Lower sales could be attributed to public holidays during the month, reports Naamsa. In 2017, the Easter holidays fell during the month of April, whilst in 2016 they fell during the month of March.

The public holidays, says Naamsa, negatively affected new vehicle exports which also reflected a sharp year on year decline.

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April 2017 aggregate new vehicle sales registered 34 956 units, a decrease of 5392 units or 13.4% from 40 348 vehicles sold in April 2016. Export sales were 24 449, a sharp fall of 8 383 vehicles or a decline of 25.5% compared to the 32 832 vehicles exported in April last year.

Overall, out of the total reported Industry sales of 34 956 vehicles, an estimated 31 479 units or 90.1% represented dealer sales, 4.3% represented sales to the vehicle rental Industry, 3.1% to Industry corporate fleets and 2.5% to government.

What do you think should be done to improve new vehicle sales in SA? What do you think are the biggest factors contributing to declining sales? Email us

Junk Status

Rudolf Mahoney, Head of Brand and Communications at WesBank, said: “This sales performance is not just bad news for the new vehicle industry, but also the country. Historically, the performance of the new vehicle market has served as a leading indicator for economic activity, suggesting that the outlook for year could be worse than initially forecast. One should also factor in that the April decline was compounded by several public holidays.”

Confidence has been shaken by the news that ratings agencies have given the South African economy a “junk status” label reports Wesbank. The deteriorating Rand has already resulted in a notable fuel price increases and the prospect of negative GDP growth is also likely to result in a cycle of interest rate hikes.

Watch monthly sales figures below: Video by Wesbank

The April 2017 new car market at 22 452 units reflected a fall of 3560 cars or a decline of 13.7% compared to the 26 012 new cars sold in April last year, Naamsa said. The car rental industry had accounted for an estimated 5.2% of new car sales in April 2017. However, the rental industry’s share was probably understated as it excluded estimates of BMW SA and Mercedes car rental sales.

Domestic sales of new light commercial vehicles, bakkies and mini buses were 10 592 units during April 2017, a decline of 1625 units or a fall of 13.3% compared to the 12 217 light commercial vehicles sold during the corresponding month in 2016.
Industry new vehicle exports had been lower than expected and at 24 449 units exported during April 2017 reflected a reduction of 8383 units or a decline of 25.5% compared to the 32 832 vehicles exported in April 2016.

Negative turn

Naamsa says: "Following the modest improvement in new vehicle sales experienced during the first three months of 2017, the outlook for the balance of the year had turned negative on the back of the extra-ordinary political events at the end of March 2017 and early April 2017.

"Political and social polarisation in South Africa, together with prospects of lower domestic growth over the short to medium term - continued to weigh on business confidence and consumer sentiment. Domestic new vehicle sales were closely correlated with the overall performance of SA’s economy and confidence levels.

"The key performance factors driving new vehicle demand included Gross Domestic Product growth, the direction of interest rates and the exchange rate. The International Monetary Fund (IMF) and a number of South African banks had revised downwards 2017 prospects for South Africa’s growth."

Naamsa anticipated that export sales would register upward momentum over the balance of 2017; thereby continuing to contribute positively to South Africa’s trade balance.     


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