Johannesburg - Total domestic new vehicle sales for this calendar year have been revised downwards for the fourth consecutive quarter in line with the continuing deterioration in the local economic environment.
The latest quarterly survey of business conditions in the vehicle manufacturing industry released by the National Association of Automobile Manufacturers (Naamsa) yesterday reveal that total domestic new vehicle sales have been revised downwards by a further 9.3 percent or 58 000 vehicles in the fourth quarter of last year from a 622 500 vehicle sales projection in the third quarter.
Read: Rough road ahead for new vehicle sales
The downward revisions mean that Naamsa’s projected total new vehicle sales for this calendar year have plummeted by almost 20 percent or a massive 140 500 vehicle sales from the 705 000 unit sales projected in the first quarter of last year.
Nico Vermeulen, the director of Naamsa, said the outlook for new vehicle sales this year was unfavourable and domestic economic growth was set to remain constrained this year and into next year, while the global economic environment was likely to be challenging.
Vermeulen said consumer and household consumption expenditure would experience pressure because of higher interest rates and the expected acceleration in the inflation rate. The widespread drought was projected to reduce gross domestic product growth this year by about 0.3 percent, while the mining and manufacturing sector would also remain under pressure, he said.
Azar Jammine, the chief economist at Econometrix, said this week that vehicle sales tended to be an exaggerated barometer of the performance of the economy, adding that vehicle sales fell in a poor economic environment but could achieve double-digit sales growth in a strong economy.
Vehicle exports
In contrast to the domestic market, Vermeulen said industry vehicle exports were expected to show further growth during the year and strong upward momentum thereafter.
Naamsa is projecting that vehicle exports will increase by 12.6 percent this year to 376 000 units from 333 802 vehicles last year and by a further 10.7 percent year on year to 416 200 vehicles next year.
Vermeulen said total domestic production was anticipated to rise by more than 4 percent in volume terms to about 640 000 vehicles this year, largely due to increased vehicle exports, from the 615 658 units produced last year.
Naamsa said the number of people employed by the domestic new vehicle manufacturing industry increased by 0.5 percent or 167 jobs in the fourth quarter to 31 432 jobs from the 31 265 industry headcount at the end of the third quarter.
Vermeulen said the headcount was related to the higher levels of vehicle production in the fourth quarter.
Naamsa added that the average monthly industry employment number for last year was 31 260 compared with 29 715 in 2014.
BUSINESS REPORT