SA car sales: 'Dismal' Rand takes its toll

Cape Town - The decline in economic growth, combined with an interest rate hike, has negatively affected South Africa’s new vehicle sales, reports the National Association of Automobile Manufacturers of South Africa (Naamsa)

Sales of new vehicles during August declined 8.2% (year-on-year). This follows the 6%.  decrease recorded in July 2015.

DEALER, RENTAL, GOVERNMENT

A total of 51 055 new vehicles sold in August, compared to 55 610 in the same month in 2014. Passenger car sales declined 7.8% year-on-year, with sales of 34 885. Light commercial vehicle (LCV) sales for the same period also declined 7.8%. Sales are down for all segments -  dealer, rental, and government.

CONSUMERS UNDER PRESSURE

Simphiwe Nghona, CEO of WesBank’s motor division said: "Consumers and business have been under pressure all year, but July’s interest rate hike and the rand’s dismal performance this past month have taken a toll on the new vehicle market.

"New vehicle sales are regarded as a leading indicator for the country’s GDP. Looking at the monthly sales, which continues to trend downwards, it could be an ominous sign of things to come."

Read: SA car sales: Are we heading towards a crisis?

WesBank’s data shows a sizeable increase in the demand for balloon payments. The number of deals incorporating balloon payments increased 32%, year-on-year, with nearly a quarter of all new cars financed making use of the facility.

Top sellers in August 2015:

BALLOON PAYMENT PROVE POPULAR

Additionally, the value of the balloon – the portion of the borrowed amount that will need to be repaid as a lump sum – has crept past the 30% mark.

Nghona added: "This month’s (September) drop in the fuel price will be welcome, but this is ultimately only one piece of the motoring puzzle. Consumers cannot and should not rely on this small saving to plan their budgets.

"The sharp uptake in balloon payments is concerning. People are using this as a measure to make monthly instalments more affordable, but my best advice is to choose a more affordable car and avoid a balloon altogether.”