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Drop in SA car sales: outlook for 2016 is 'uninspiring'

2016-01-08 08:51

ANOTHER SLUMP ON THE WAY? The struggling Rand and low consumer confidence could see a decline in SA vehicle sales in 2016, says Naamsa Image: Motorpress

Cape Town - South African vehicle sales in 2015 saw a 4.1% decline compared to the same period in 2014, reports National Association of Automobile Manufacturers of SA (Naamsa).

Naamsa said: "With the exception of light commercial vehicle sales, industry sales ended 2015 on a weak note with aggregate industry new vehicle sales at 49 250 units recording a decline of 2171 vehicles or a fall of 4.1% compared to the total new vehicle sales of 51 421 units during the corresponding month of December, 2014."

What does 2016 hold for the local automotive industry considering the struggling Rand?

December 2015 vehicle sales 

In December 2015, new passenger cars saw a year-on-year drop of 7.6% whereas the light commercial vehicle market improved by 4.6%. Sales of medium and heavy commercial vehicles declined by 2.1% year-on-year.  

Export sales recorded a fairly substantial decline in December 2015 with 17 391 units (from 4439 vehicles or 20.3%) compared to the 21 830 vehicles exported during December 2014.

December 2015 new vehicle sales - by Naamsa

2015: A challenging year for local car sales

For the second year in succession, new vehicle sales during 2015 in South Africa recorded a year on year decline.  

A slowdown in the domestic economy, increases in interest rates, pressure on consumers’ disposable income and new vehicle inflationary pressures contributed to a fall in total domestic sales. 

Sales during 2015 declined by 4.1% to 617 927 units compared to 644 259 sold in 2014. 

Naamsa said: "Overall, 2015 turned out to be a difficult year for the South African automotive industry with domestic new vehicle sales under pressure, particularly at dealer level, despite attractive incentives and a strong contribution by the car rental sector which accounted for an estimated 12.5% of new car sales during the year."

Industry trading conditions remained intensely competitive with over 52 brands and 2595 model derivatives, in the new car and light commercial vehicle sectors, competing for consumers’ franchise.

SA vehicle industry sales: 2010 – 2015 (by segment)

2016: 'Uninspiring' outlook for domestic sales

Naamsa: "2016 is expected to be a lacklustre year for the SA automotive industry, particularly in the case of domestic new vehicle sales.  Industry production levels, on the back of expected further growth in vehicle exports, should however remain in an upward phase. 

"Domestically, economic growth continues to disappoint and South Africa’s fiscal position remains under pressure as a result of difficulties experienced by a number of state owned enterprises, rising expenditure on social programmes and increased debt servicing costs."

Projected SA vehicle sales for 2016:

Cars -    393 000
Light Commercials - 175 000
Medium Commercials - 10 200
Heavy, Extra Heavy, Commercial Buses - 20 000
Total Vehicles - 598 200

What about South Africa's economic situation?

Naamsa: "South Africa’s economic situation remains constrained with expectations of sluggish economic growth of around 1.0% at best.  The volatile and sharply weaker exchange rate reflects poor international perceptions. The sharply lower value of the Rand will translate into upward pressure in inflation, particularly in the case of new vehicle prices in the coming year. 

"The effect of the severe drought throughout the country will also negatively affect economic growth.  Expectations of further increases in interest rates and administered prices (electricity, water, fuel) will further pressurise personal disposable income."

What about local vehicle sales? Will we see yet another decline?

Naamsa: "It is against this background that the outlook for domestic sales in 2016 remains uninspiring and, at this stage, a decline in total new vehicle sales of between 3.0% and 5.0% is anticipated. The consumer driven new car market is likely to show a decline in volumes at the upper end of the range with new commercial vehicle sales projected to perform better in relative terms."

"Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa was expected to show an increase from 615 000 vehicles produced in 2015 to close on 660 000 vehicles in 2016 – an improvement in vehicle production of about 7.3%. This figure could prove conservative if vehicle exports expand more than currently anticipated." 

Read more on:    naamsa  |  south africa  |  auto industry  |  car sales

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