SA car industry: ‘Tough times ahead, but still world class’

2016-04-07 06:00

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: “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.”

Despite the negative market projection, some experts believe South Africa has a high standard in vehicle dealerships, on par with some of the best globally.

South Africa has some of the ‘best-run vehicle dealerships in the world’ in terms of the benchmarking of successful businesses, according to Warren Olsen, CEO of Sewells, global consulting specialists in the automotive industry.

Olsen said: “Several times in the past the local retail motor dealers have had to face very tough challenges, particularly during the global economic meltdown of 2008/9 when dealer sales of cars and LCVs fell 42.5% in a market that tumbled by 34.1%.

“But even at this time of financial crisis many of them showed determination and innovation. They managed to fight back strongly as the economy improved.

“Times are tough again, but nothing like we encountered in those black days in 2008. Dealer sales of cars and LCVs in 2015 fell by only 2.9% versus a market decline of 4.2% when compared to the 2014 figures.”

Using the return on average assets (ROAA) as the measure, South Africa’s benchmark is at 22%, reports Sewells. This places SA ahead of Australia (15.6%), New Zealand (14.5%), China (9.3%), India (16%), Indonesia (6.8%) and Thailand (21%). The only countries that rate higher than SA in this group are the Philippines (32%) and Vietnam (23%).

In South Africa, the Sewells Group analyses the monthly financials of more than 1200 retail motor dealers and tracks their financial and operational performance.

- Wheels24.

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