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SA car sales: Rough start for local vehicle industry in 2019

2019-02-04 07:00

Image: iStock

New vehicle sales stumbled into 2019 with industry sales down 7.4% to 42 374 units year-on-year.

According to the National Automobile Association of South Africa (Naamsa), passenger vehicles sales declined 10.8%, while Light Commercial Vehicle sales remained flat with 0% growth compared to January last year.

Slow start expected

"This doesn’t come as a surprise given WesBank's outlook for the new vehicle marketing during 2019," says Ghana Msibi, WesBank Executive Head of Sales and Marketing.

"We expect the first half to be slow given the increased pressure on household budgets as interest rates slowly increase and, especially, the political uncertainty towards the May elections."

SEE: Local sales decline, record car exports - SA vehicle sales - a year in review

While many deals would have been concluded in December ahead of January price increases, sales across segments were hit hard, apart from Medium Commercial Vehicles that showed some resilience – albeit in small volumes – with 24.6% growth (552 units).

Erratic fuel prices and high inflation continue to compound South Africans’ ability to purchase new vehicles. "We have seen steady increases in deal duration, which continues to impact new vehicle sales as consumers hold onto their cars for over 12% longer than they did in September 2017,” said Msibi.

"Given the economic environment, it is prudent for consumers to delay their vehicle purchases within the practical considerations of maintenance costs and reliability."

The rental market impacted the market substantially, slowing 25,7% to 6,041 units “We anticipated many tender processes and fleet deals to be delayed until after the elections but expect business to resume to normal levels in the second half of the year," continued Msibi. "But these 2,091 less units in the market are a significant portion of the 3 398 fewer units sold during January."

By contrast, the dealer channel showed some relatively encouraging robustness, down 3.3% year-on-year. This shows encouraging levels of consumer demand and is in line with WesBank's 2019 forecast for passenger cars to decline 1.5% and light commercial vehicles to grow 0.3% with a better-performing second half.

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