New car sales under pressure despite incentives

Cape Town - Despite attractive cash incentives on offer by a number of automotive companies, the consumer driven new car market had remained under pressure during November, the National Association of Automobile Manufacturers of SA (Naamsa) said on Thursday.

"Domestically, the short to medium term outlook for new vehicle sales remained extremely challenging. Double digit new vehicle price inflation, pressure on household disposable incomes, low levels of consumer and business confidence and relatively high interest rates represented a negative environment for new vehicle sales," said Naamsa.

"On the other hand and in sharp contrast, automotive industry vehicle production remained on a relatively solid footing on the back of higher new vehicle exports."

The sales of 28 334 units in November reflected a decline of 4 548 cars or a fall of 13.8% compared to the 32 882 new cars sold in November last year.

In November conditions in the new vehicle market, with the exception of the light commercial vehicle segment, have remained extremely challenging, according to Naamsa.

The new vehicle market was characterised by double digit year on year declines in most segments.

Statistics for new vehicle sales in November were released on Thursday by the Department of Trade & Industry.

In contrast, export sales of new motor vehicles reflected what Naamsa terms a noteworthy year-on-year (y/y) improvement and remained on target for a new annual record.

In November aggregate new vehicle sales were at 46 413 units - a decline of 4 925 vehicles or a fall of 9.6% compared to the 51 338 vehicles sold in November last year. Aggregate industry export sales were at 31 508 vehicles for November - an increase of 3 395 vehicles or an improvement of 12.1% compared to the 28 113 vehicles exported in November last year.

READ: New vehicle sales recession intensifies - Naamsa

Naamsa expects the upward momentum in new vehicle exports to continue into 2017. In its view export sales should contribute positively to South Africa’s current account of the balance of payments in the year ahead.

Overall, out of the total reported industry sales of 46 413 vehicles, an estimated 38 557 units or 83.1% represented dealer sales, 8.5% represented sales to the vehicle rental industry, 4.8% sales to government and 3.6% represented industry corporate fleet sales.

The car rental industry accounted for 13.3% of all new cars sold during November. This percentage was lower than the monthly car rental sales since the beginning of the year and could be attributed to the runout of the refleeting cycle, according to Naamsa.

Domestic sales of industry new light commercial vehicles, bakkies and mini buses - at 15 632 units during November - reflected a noteworthy increase of 148 units or an improvement of 1.0% compared to the 15 484 light commercial vehicles sold during the corresponding month last year.

Sales of vehicles in the medium and heavy truck segments of the industry at 830 units and 1 617 units, respectively, had registered substantial falls and, in the case of medium commercial vehicles, reflected a decline of 191 units or 18.7% and in the case of heavy trucks and buses, a decline of 334 vehicles or a fall of 17.1% compared to the corresponding month last year.

"The latest figures suggested continued lower levels of capital investment in the economy and reflected the subdued economic conditions in South Africa," said Naamsa.

"On the assumption that the economy would register growth in 2017, in real terms, of around 1.0% - new vehicle sales could grow next year by between 3.0% and 4.0%."

Read Fin24's top stories trending on Twitter:

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Yes. We need the money.
11% - 797 votes
It depends on how the funds are used.
74% - 5282 votes
No. We should have gotten the loan elsewhere.
15% - 1047 votes