Johannesburg - The depressed economic environment, low business and consumer confidence and pressure on the disposable income available to consumers contributed towards new car sales slumping year on year by 13.2 percent to 37 309 unit sales last month.
This is the sharpest decline in new car sales this year, which occurred despite the vehicle rental industry accounting for 21.9 percent or more than one in every five new cars sold in the month.
However, the vehicle rental industry accounted for 23.5 percent of all new cars sold in September last year.
Sales of new light commercial vehicles rose year on year by 0.3 percent to 15 121 units while medium commercial vehicle sales dropped by 1.3 percent to 890 units and heavy truck and bus sales by 8.9 percent to 2 002 units.
Azar Jammine, the chief economist at Econometrix, yesterday warned against overstating the decline in new car sales and stressed vehicle sales were an “exaggerated barometer of economic activity”.
Sales were boosted in September last year by the replenishment of inventory following the steel and engineering sector strike, he said.
Jammine referred to the 2009 global financial crisis when car sales dropped by between 30 percent and 40 percent, and said that last month’s sales decline had fed into “the story of the economy recording virtually no growth and the economy virtually being in recession”.
Not in a good space
But Jammine stressed the car market was not collapsing, although it was “not in a good space” and the sales decline was nowhere near as severe as in 2009.
However, he admitted concern at not seeing any light at the end of the tunnel. This was confirmed by the headline manufacturing purchasing managers’ index for last month, which remained just below the 50 point threshold.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said the latest figures showed that the recession in domestic new vehicle sales had accelerated further last month but export sales of new motor vehicles had achieved a new milestone by increasing 14.3 percent year on year to reach a record monthly total of 35 181 vehicles.
Vermeulen stressed that employment in the vehicle manufacturing industry was stable and could increase as vehicle production was ramped up for the export market.
Kamilla Kaplan, an economist at Investec, said the decline in car sales was congruent with depressed consumer confidence, making consumers cautious about purchases of big ticket items, particularly in an environment of rising interest rates.
Tough times
Nicholas Nkosi, the head of vehicle and asset finance retail banking at Standard Bank, said the economic environment was tough and affordability still a major issue in the vehicle market, resulting in consumers adopting a “wait and see” attitude to purchases.
Simphiwe Nghona, the chief executive of WesBank’s motor division, said the declining new vehicle sales market had been responsible for the hyper competition between vehicle manufacturers, leading to very aggressive marketing activity to the benefit of consumers.
BUSINESS REPORT