New vehicle sales show signs of recovery

Wednesday, December 2, 2009

Pretoria - New vehicle sales for November show that the market is recovering from the recession, says the National Association of Automobile Manufacturers of South Africa (Naamsa).

"The latest new vehicle sales figures reflected a continuation of the consolidation in the overall sales cycle coincident with the South African economy moving out of recession during the third quarter of 2009," said Naamsa on Wednesday.

It said that aggregate new vehicle sales for November 2009 at 30 019 units reflected a decline of 4 113 vehicles or 12. 1 percent compared to the 34 132 units sold during the corresponding month last year.

The association said that factoring in aggregate vehicle sales reported by the AMH/AAD Group, the year on year decline amounted to 6.3 percent.

"However, the November sales figures should be seen in the context of the low base in November last year characterised, at the time, by a sharp decline in the domestic market as a result of the onset of the global economic and financial crisis during the last quarter of 2008," said Naamsa.

Of the total Naamsa industry sales of 30 019 vehicles, 76.3 percent or 22 911 units represented dealer/retail sales, 11.8 percent sales to the car rental industry, 6.7 percent sales to government and 5.2 percent sales into auto industry corporate fleets.

While there was a decline in the annual figure, new car sales had registered a year-on-year gain of 1 007 units or an improvement of 4.6 percent.

In November 2009, new car sales had shown a decline of 6.7 percent compared to October 2009.

New light commercial vehicles, bakkies and minibuses at 9 208 units in November reflected a 19.8 percent decline compared to the 11 485 units sold units sold in November 2008. Light commercial vehicle sales reported by the AMH /AAD Group, the year-on-year decline amounted to 2 260 units or 18.6 percent.

Medium and heavy truck sales also saw falls in November with sales of medium commercials at 554 units and sales of heavy commercial vehicles at 940 units. This resulted in declines of 35.4 percent for medium commercials and 44.1 percent in the case of heavy and extra heavy trucks and buses compared to November 2008.

"The continued weakness in medium and heavy truck sales pointed to lower investment spending in the economy," said Naamsa.

Export sales, however, had encouragingly registered further improvement in November this year recording the best monthly performance for the year. This was in line with increased demand for cars in the international markets due to recovery of the economic crisis.

"In the event, November, 2009 industry export sales at 22 969 had recorded an improvement of 2 018 vehicles compared to the 20 951 vehicles exported during the previous month of October, 2009," noted the association.

Additionally the association said that with 11 months of 2009 accounted for, aggregate industry new vehicle sales at 364 812 units reflected a decline of 27.1 percent compared to the 500 562 vehicles sold during the corresponding period last year.

"The latest sales figures reinforced the view that the industry was slowly emerging from the extremely severe recession in the domestic automotive market which had started mid 2006. Any further improvement in the months ahead was likely to be uneven and hesitant off an extremely depressed base," said Naamsa.

It said that the reduction of 500 basis points in interest rates since the end of last year should support a modest recovery in new vehicle sales in 2010.

"The encouraging improvement in export sales over the past few months would provide much needed support to vehicle producers and auto parts suppliers," said the association.

Commenting on the outlook, Standard Bank said passenger car sales had caught up with last year's low sales levels, which have improved annual comparisons.

"We maintain that sales will register between 5 and 8 percent growth in 2010, even though confidence levels are improving and financial duress is subsiding. Demand will be sapped by relatively poor credit records of the past, higher monthly electricity bills and the need to bolster savings following years of over-indebtedness," it said.

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