Johannesburg - Signs are emerging that the rate of decline in new car sales is bottoming out. Figures released yesterday showed that total new vehicle sales dropped year on year by 10.1 percent to 48 745 units.
Sales of new cars declined last month by 9.5 percent year on year to 32 738 units, light commercial vehicles, bakkies and minibuses by 10.7 percent to 13 559, medium commercial vehicles by 26.8 percent to 698 units and heavy trucks and buses by 9.2 percent to 1 750 units.
However, Econometrix chief economist Azar Jammine pointed to the improvement last month in month-on-month sales of cars and light commercial vehicles.
New car sales improved last month by 2.5 percent from the 31 931 sales registered in September while new light commercial vehicle sales rose 5.3 percent last month from the 12 875 units sold in September.
Jammine said this was encouraging and a sign that the new vehicle market was bottoming out. This was expected because there were other signs in the rest of the economy that it was not deteriorating any more, including the big increase in the Reserve Bank’s leading indicator.
Jammine added that more generally inflation was turning out to be lower than anticipated, meteorologists were indicating that it looked as if the drought was about to end and interest rates did not look as if they were going to rise any more.
The rand had also recovered to less than R15 to the euro, which would help to keep vehicle price increases in check and gradually made new cars more affordable, he said.
“New car sales were driven down by the high rate of increase in car prices and this stands to slow down materially. Overseas tourist arrivals also grew by 19.7 percent in the first half of this year, which must boost the car rental market. All of this is making for a gradual turnaround in the new car market,” he said.
Rudolf Mahoney, the head of brand and communication at WesBank, warned about reading too much into the month-on-month improvement in sales because the same trend was evident in the same months in previous years and the improvement was based on only a single month.
Highest level
However, Mahoney confirmed that WesBank had experienced a slight increase in new vehicle applications between September and last month to the highest level to date this year despite decreasing by 15 percent year on year. “Something might be happening,” he said.
Mahoney said the shift from new to used vehicles was still very prolific, with used vehicle applications last month increasing by 3.4 percent to a new all-time record.
He said the weakness of the rand had a major impact on new vehicle prices and resulted in a 16.6 percent increase in the average new vehicle transaction value between January last year and last month. “Consumers cannot adjust to this extent, but with a firming rand, manufacturers will not have to increase prices as aggressively and consumers will be able to move back into the new vehicle market,” he said.
Nicholas Nkosi, the head of Standard Bank vehicle and asset finance for retail banking, said the 9.5 percent year-on-year decline in new vehicle sales was relatively better compared with the double digit declines of recent months, but was masked by the sales contribution from the car rental industry.
“The passenger car market will continue to remain under pressure in the short to medium term,” he said.
New vehicle exports last month increased by 10.8 percent year on year to 27 719 units.
BUSINESS REPORT