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SA car sales drop in April: Weak Rand takes its toll

2016-05-04 07:46

ANOTHER DROP IN SALES: The National Association of Automobile Manufacturers of South Africa (Naamsa) has reported a total industry new vehicle sales decline of 9.2% in April compared to the same period in 2015. Image: iStock

Johannesburg - The South African new vehicle sales market continued its 2016 decline, this April. 

According to the latest aggregated figures from the National Association of Automobile Manufacturers of South Africa (Naamsa) total industry new vehicle sales declined 9.2%, year-on-year, with only 40 390 new vehicles sold across all segments.

Sales breakdown

Passenger car sales fell 13.2%, year-on-year, with sales of 26 077 new cars during April. In the Light Commercial Vehicle (LCV) segment the arrival of highly anticipated new models helped buck the downward trend somewhat, with a minor 0.1% sales decline, compared to the same period in 2015. 

However, this is expected to be short-lived and should normalise within one or two months.

Overall, out of the total reported Industry sales of 40 390 vehicles, an estimated 36 798 units or 91.1% represented dealer sales, 4% represented Industry corporate fleets sales, 3.1% represented sales to the vehicle rental Industry and 1.8% to government.  

Naamsa vehicle sales April 2016

As had been the case since the end of last year, the new car market had continued to experience pressure during April, 2016 and at 26 077 units registered a decline of 3949 cars or a fall of 13.2% compared to the 30 026 new cars sold in April 2015, reports Naamsa.    

Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 12 192 units during April, 2016 reflected a marginal decline of 18 units or a fall of 0.1% compared to the 12 210 light commercial vehicles sold during the corresponding month last year.

Naamsa sales April 2016

Steep car prices in SA

Finance specialist WesBank reports that the demand for new vehicles has slowed notably. During April 2016 application volumes for new vehicles were down 7.1% compared to the same period last year, a figure that is exacerbated by sustained new car price inflation.

During this past month the average new deal value was R287 000. This compares starkly to April 2015, when the average deal value was R257 000. This 11.8% difference is evidence of sharply rising new car prices.

Why are new car sales in decline? 

Household budgets face increasing pressure in the form of rising interest rates and mobility costs. The prime interest rate has been hiked from 8.5% to 10.5%, since January 2014. Fuel prices have increased by nearly R1 per litre since March 2016. Given this, new vehicles have become even more unaffordable and consumers continue to flock to the used car market in a search for value and affordability. 

Simphiwe Nghona, WesBank CEO of Motor Retail, said: "Although the Rand seems to have stabilised, the damage of the sustained weakness of the past few year has taken its toll on the market. This affects affordability, which is the biggest driver for consumers moving to the used car market."

"Consumers can’t control interest rates or inflation, but they can control affordability through the car they buy. In the current economic climate the used vehicle market is their best choice."


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