Slow growth in July vehicle sales

Tuesday, August 2, 2011

Pretoria - Vehicle sales slowed to 10.5% year-on-year in July, the National Association of Automobile Manufacturers of South Africa (NAAMSA) said.

"Whilst sales in all segments had registered an improvement on the corresponding month last year, there were clear signs of slower underlying momentum in demand for new cars. July 2011 aggregate industry domestic sales had improved by 4 358 units (or 10.5%) to reach 45 703 vehicles from 41 345 vehicles sold during July last year," said NAAMSA on Tuesday.

In July 2011, new car sales at 32 030 units showed an improvement of 2 819 new cars or an increase of 9.7% compared to a rise of 17.3% in June.

Out of the total July 2011 industry reported sales of 45 703 vehicles, 80.9% units represented dealer sales, 12.8% represented sales to the car rental industry, 3.4% sales to government and 2.9% represented industry corporate fleet sales.

"There had been a substantial decline in the growth momentum of new car sales and the year-on-year increase represented the lowest improvement in the past 18 months," said NAAMSA, adding that the July 2011 new car market had received support from strong demand by car rental companies. The car rental industry accounted for 17.4% of total sales.

"Following 18 months of solid growth in new car sales, slower growth and demand for new cars in the domestic market was anticipated over the balance of the year in line with developments in the broader economy," said the association.

There was a gain of 10.2% in July 2011 compared to the 10 366 units of sales in July 2010 of industry new light commercial vehicles, bakkies and minibuses at 11 420.

Sales of vehicles in the medium and heavy truck segments at 765 and 1 488 units respectively had recorded an increase of 23.6% for medium commercial vehicles and an increase of 29.5% in the case of heavy trucks and buses, compared to July 2010.

Sales of extra heavy commercial vehicles had registered an exceptional performance rising by 43.8% from 719 units in July last year to 1 034 units in July 2011.

"Total year to date sales of medium, heavy commercials and buses remained 25% ahead of the corresponding seven months of last year. The performance reflected positive fixed investment associated with major infrastructural projects," said NAAMSA.

Exports of South African produced motor vehicles in July, 2011 at 25 147 units reflected an increase of 8.1% compared to the 23 254 vehicles exported in July 2010.

Although the momentum of new vehicle exports remained positive, numbers in July had been adversely affected by a few days' losses at several automotive plants due to strike action in the steel and engineering and associated industries.

"Total year to date domestic sales in calendar 2011 remained 15% ahead of the corresponding seven months in 2010."

Looking ahead, NAAMSA said that subdued growth in private sector credit extension and in money supply as well as electricity and rising fuel prices would combine to impact negatively on consumer disposable income.

In addition, the impact of widespread industrial action and counterproductive rhetoric about nationalisation and expropriation had negatively affected consumer and business confidence in South Africa, said NAAMSA. As a result, "new vehicle sales over the balance of the year were likely to come under increasing pressure."

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