Car sales under pressure

With the impending R1,30 a litre petrol price increase due into play at midnight tonight (April 03), it is little wonder South African car buyers have been holding back on purchases – the petrol price, the falling Rand, increased taxes and general economic malaise a heavy burden to bear.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) said the declining trend in new vehicle market since the beginning of the year continued into March 2019, although the lower passenger car sales had again been offset by fairly strong commercial vehicle sales numbers.


NAAMSA confirmed aggregate domestic sales at 47 718 units declined by 1 512 units or 3,1% from the 49 230 vehicles sold in March last year. Export sales again registered strong growth reflecting a substantial improvement of 7 135 vehicles or a gain of 23,7% compared to the 30 161 vehicles exported in March last year.

Overall, out of the total reported Industry sales of 47 718 vehicles, an estimated 41 235 units or 86,4% represented dealer sales, an estimated 6,6% represented sales to the vehicle rental Industry, 4,3% to government and 2,7% to industry corporate fleets.

The March 2019 new passenger car market registered a decline of 1 805 cars or a drop of of 5,6% compared to the 32 153 new cars sold in March last year. The car rental Industry’s contribution accounted for 8,8% of new car sales in March 2019.

“The weakening Rand and overall shadow of possible ratings agency downgrades did not help March new vehicle sales as consumer and business confidence continued to come under pressure.

“Household budgets also continue to take strain as a result, directly impacting demand for new vehicles as motorists continue to hold onto their vehicles for longer,” says Ghana Msibi, WesBank Executive Head of Motor.


“Additional fuel price increases in April will continue to contribute to this burden, as will the continued impact and threat of load shedding.

“At least interest rates remained unchanged, providing some small form of relief for consumers,” says Msibi.

“WesBank data shows a slowly shifting trend away from fixed rate deals – good finance practice in a low-interest rate environment – towards linked deals, although linked deals remain the majority. With interest rates unlikely to decline in the short term, the opportunity to fix rates in your finance contract remains.”

Domestic sales of new light commercial vehicles, bakkies and mini buses at 14 994 units during March 2019 recorded an improvement of 275 units or a gain of 1,9% from the 14 719 light commercial vehicles sold during the corresponding month last year.

NAAMSA expected the light commercial vehicle market to continue to register growth over the medium term although sales in the medium and heavy truck segments of the industry had a mixed performance and at 775 units and 1 601 units, respectively, reflected a gain of 45 vehicles or an improvement of 6,2%, in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, a decline of 27 vehicles or a fall of 1,7% compared to the corresponding month last year.

The March 2019 export sales number represented another admirable performance with export sales at 37 296 vehicles reflecting a substantial increase of 7 135 units or a gain of 23,7% compared to the 30 161 vehicles exported in the same month last year.

The momentum of vehicle exports over the course of 2019 should increase further and industry export sales for the year could reach close to 400 000 units compared to the record 351 139 vehicles exported last year.

Msibi remains optimistic for the market’s performance in the second half.

“While sobering, the market picture is not all doom and gloom, nor unexpected. We forecast first half sales to be slow with a better-performing second half,” he says.

“The market will remain under pressure during April, which will be impacted by public holidays and resultant fewer selling days, as well as a wait-and-see mentality heading up to elections in May.”

“The new vehicle market continues to perform within our expectations of a downward trend, as consumers find themselves increasingly under pressure,” commented Mark Dommisse, Chairperson of the National Automobile Dealers’ Association (NADA), which represents franchised car and commercial vehicle retailers in South Africa.

“Many dealer principals within the NADA network have commented on noticeably slower foot traffic on showroom floors. This is clearly a sign of economic pressures on household budgets.

“The commercial vehicle market is showing encouraging signs of stability, which bodes well heading into the elections next month, especially considering the challenges being faced by the industry and economy. It appears that this segment of the market will continue to perform at these levels.”

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