Vehicle sales continue downward spiral

Wednesday, September 2, 2009

Pretoria - New vehicle sales for the month of August continued on a downward trend, according to the National Association of Automobile Manufacturers of South Africa (NAAMSA).

NAAMSA on Wednesday reported that the new vehicle sales for August, at 29 667 units, reflected a decline of 10 519 vehicles or 26.2 percent compared to the 40 186 units sold during the corresponding month last year.

"Factoring in aggregate vehicle sales reported by the AMH/AAD Group, the year-on-year decline amounted to 23.2 percent," said NAAMSA in its monthly release of vehicle sales in the country.

Last month vehicle sales fell by 27.4 percent.

Out of a total industry sales of 29 667 vehicles, 76.5 percent represented dealer/retail sales, 14.5 percent represented sales to the car rental industry, 5.3 percent represented sales to government and 3.7 percent represented sales into auto industry corporate fleets.

Sales in August showed a decline of 6 509 vehicle or 25.7 percent in comparison to the 25 298 new cars sold in the same period last year.

"Factoring in aggregate new car sales reported by the AMH/AAD Group, the year-on-year decline had amounted to a fall of 21.1 percent. This was an improved performance in relation to previous months," said the association.

It said it was encouraging that the selling rate of new vehicles improved in August 2009 by 9.8 percent compared to July 2009.

New light commercial vehicles, bakkies and minibuses at 9411 units during August showed a decline of 2641 or 21.9 percent vehicles compared to the 12052 units in August 2008. The year-on year decline taking into account sales by the AMH/AAD Group comes to 2870 or 22.3 percent units.

Vehicles in the medium and heavy truck segments with the exception of buses, also showed declines in August.

The sale of medium commercials at 527 units and 940 units had registered a fall of 361 vehicles or 40.7 percent in medium commercials.

For heavy commercial units the fall was at 51.7 percent while in the case of heavy and extra heavy trucks and buses compared to the corresponding month last year.

"Continued weakness in medium and heavy truck sales reflected lower investment spending as well as difficulties experienced by truck operators in accessing loan finance.

"On a positive note, there were indications recently of a more accommodative stance by financial institutions in credit extension," said the association.

Since the beginning of the year, aggregate industry new vehicle sales showed a decline of 31.6 percent, compared to the 378 103 vehicles sold during the corresponding eight months of last year.

NAAMSA said that export demand continued to be low contributing to a record decline of exported vehicles in August 2009. Export sales at 9030 vehicles reflected a decline of 18053 vehicles or 66.7 percent compared to 27 083 vehicles exported last August.

"The extent of the decline reflected the impact of the global financial and economic crisis on the South African automotive industry. Little or no improvement in export sales is anticipated in the short term," said NAAMSA.

It said that the operating environment for August remained "extremely difficult" with all sectors of the country's automotive industry continued to experience sustainability challenges.

It said that the industry's domestic operating environment would only be revived if consumer spending picked up and this depended on a more favourable inflation outlook, lower interest rates and stimulatory government expenditure.

"Improvement in vehicle exports would depend on a recovery in global economic conditions and a return of confidence in international financial markets," said NAAMSA.

Investment Solutions senior economist Chris Hart told BuaNews that low interest rates were yet to contribute to the revival of sales

"We have been experiencing negative growth. The low interest rates have not yet contributed to the revival in sales. Consumers are still under extreme pressure with debt while the banking sector is reeling from repossessions. Banks are reluctant to lend to finance vehicles," said Mr Hart.

He predicted that vehicle sales will swing into positive territory by the end of the year.

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