Slump in new vehicle sales noted

2015-08-26 06:00
NEW car sales are in decline. 

NEW car sales are in decline. Photo: Wheels24

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

NEW vehicle sales declined by 6% in July and the National Association of Automobile Manufacturers of South Africa (Naamsa) commented that the slow-down in domestic new vehicle sales had continued with new car and heavy truck sales compared to July 2014.

New car sales registered the largest year-to-date monthly decline.

Export sales of new vehicles showed an improvement with year-on-year gains.

New car sales wane

July 2015 aggregate new vehicle sales at 54 112 units were down 6,1% from the 57 636 vehicles sold in July 2014.

Overall, out of the total reported industry sales of 54 112 vehicles, an estimated 44 564 units or 82,4% represented dealer sales, 11,1% represented sales to the vehicle rental industry, 3,4% to industry corporate fleets and 3,1% constituted sales to government.

Naamsa claims sales of new cars in the consumer-driven new car market at 36 506 units reflected a substantial decline of 3 509 units or a fall of 8,8% compared to the 40 015 new cars sold in July 2014.

Of the 54 112 new vehicles that were sold in July, 36 506 were passenger cars – representing an 8,8% year-on-year decline for this segment. Light commercial vehicle (LCV) sales saw a marginal increase, with 15 090 sales – a year-on-year increase of 0,7%.

Market “very attractive”

“Major competition and very attractive marketing incentives from manufacturers have driven LCV sales all year. Even though sales in this segment look relatively flat, they’re quite positive given the overall market conditions,” says Simphiwe Nghona, WesBank’s Motor Division executive head.

Consumer demand for vehicle finance remains strong, says WesBank – however, with an all-time high in the volume of finance applications received. A total of 138 485 applications were received in July. Finance applications for new vehicles grew by 3,2% year-on-year. Application volumes for used vehicles grew by 8,6% for the same period, the result of consumers continuing to buy down or looking for better value in the used market.

The Reserve Bank’s recent interest rate hike of 25 basis points (0,25%) will also affect heavily-indebted consumers, who will have to spend more of their disposable income on servicing debt. Household debt levels remain high and consumer credit profiles are deteriorating. New affordability rules under the National Credit Act have seen a decline in the number of approvals, as these consumers are unable to qualify for more credit.

WesBank also advises consumers to not plan their budgets around August’s drop in fuel prices. The petrol and diesel prices are influenced by a depreciating rand and international oil prices – both volatile factors that could see prices increase in the coming months. The relief from lower fuel prices will most likely be short-lived.

“Given the prevailing economic conditions, consumers who are currently in the market for a new car should consider the long-term impact on their budgets, and carefully structure their finance contracts.

“They should use large deposits to help lower the monthly instalment amounts, and consider a fixed interest rate to safeguard themselves against future interest-rate hikes. Longer repayment terms could also assist with affordability, but buyers should be very cautious when considering balloon payments. Insurance and maintenance costs should also be included in mobility budgets.”

Domestic sales of new light commercial vehicles, bakkies and mini-buses during July 2015 at 15 090 units reflected a marginal improvement of 111 units or a gain of 0,7%.

Exports on the rise

Vehicle exports continued to reflect upward momentum and were increasingly contributing positively to South Africa’s current account of the balance of payments.

Industry new vehicle exports at 28 291 units during July 2015 had registered impressive growth compared to the corresponding month in 2014, says Naamsa, rising by 5 555 vehicles or 24,4% compared to the 22 736 export sales in July 2014.

Vehicle exports for 2015 remained on target to improve, in annual terms, by about 20% to a projected industry record export number of about 330 000 for the year.

Subdued levels of economic activity, electricity supply constraints, the impact of higher personal taxation, petrol price inflation, new vehicle price increases and higher interest rates all continued to contribute to a deteriorating outlook for domestic new vehicle sales. Business confidence and consumer sentiment were also under pressure.

In contrast to the challenging domestic trading environment, automotive industry vehicle production remained on a firm footing and the sharply higher new vehicle export sales would continue to support the industry’s vehicle production levels and South Africa’s balance of payments. – Wheels24

Join the conversation! encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions. publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Inside News24

Financial advisors – Do you need one and should you get one?

The good, the bad, and everything else you need to know when considering hiring a financial advisor.


Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.