New vehicle sales slowing

2012-10-03 00:00

ALTHOUGH the new vehicles industry experienced yet another month of positive growth, it is clear that the consumer’s appetite for new vehicles is waning.

The National Association of Automobile Manufacturers of SA (Naamsa) said yesterday that new vehicle sales grew by 1,4% year on year last month to 55 097 units, from 9,4% year on year in August 2012.

However, fewer selling days in September was a major contributing factor in putting the brakes on the growth in new vehicle sales.

GROWTH WEAKENING, BUT STILL POSITIVE

New vehicle sales took off at a relatively rapid pace in 2012, off a solid base set in 2011. However, there have been growing signs that the overall industry growth level will slow to between eight and 10% this year, from about 15,9% last year.

Executive head of sales at WesBank Chris de Kock told The Witness that although growth has certainly slowed, there were fewer selling days in September 2012 compared with previous months.

HEALTHY LEVEL OF APPLICATIONS

De Kock said there was still a healthy level of activity in the new vehicle market, going by the number of applications received by the asset financier.

“We received the highest number of applications per day in two years last month,” De Kock said.

He expects growth in 2012 to come in at between eight and 10%.

Naamsa said total sales in the first nine months of 2012 came in at 10% more than in the same period of 2011.

De Kock added that demand from the government sector grew by about 20% year on year last month.

USED CAR MARKET TAKING STRAIN

Mike von Höne, CEO of vehicle risk intelligence company TransUnion Auto told The Witness that the used car market continued to suffer, primarily due to the relative buoyancy of the new vehicle market.

Von Höne said the ratio of new to used vehicles financed continued to decline, coming in at 1,63 used cars for every new car financed in August 2012, compared to 1,88 in May 2012.

VEHICLE PRICES REMAIN STABLE

TransUnion’s Vehicle Pricing Index (VPI) for the third quarter of 2012 revealed that the price growth of new and used vehicles remained low.

The VPI found that new and used car inflation slowed to its lowest level this year, at 2,3% and 2,1% respectively in the third quarter of 2012.

Von Höne said new vehicle prices were expected to remain stable for the rest of 2012.

“As long as the rand stays fairly stable, I doubt manufacturers will push up prices.

“It’s a very competitive environment with good deals on offer.”

WesBank’s average finance deal size on new vehicles was about R215 000, while its average used vehicle deal size was about R152 000.

Von Höne said about 80% of all new and used cars financed are priced at less than R200 000.

FORECAST

Nedbank economist Isaac Matshego expects vehicle sales to remain positive, albeit at lower growth rates.

“It is likely that much of the replacement demand stemming from the slump in the market in 2008 and 2009 has now been satisfied.

“Although the SA Reserve Bank’s interest rate cut in July will give some support and the high base established during the third quarter of 2011 has now been fully accounted for … car sales growth is likely to remain modest into 2013,” Matshego said.

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