Johannesburg - New vehicle sales began the year in a weak note, falling 6.9 percent year-on-year and extending the 4 percent decline in 2015.
Investec notes this data, from the National Association of Automobile Manufacturers of SA (Naamsa), underscores survey evidence in the EY/BER retail survey, which showed that new car dealers expect a deterioration in sales volume growth in the first quarter of the year.
The bank says, for the 2016 year as a whole, Naamsa expects a drop of 3 – 5 percent in total new vehicle sales.
Investec points out that passenger vehicle sales, in particular, which comprise two-thirds of total sales, are likely to underperform. In January, as sales in this category fell 6.1 percent year-on-year after declining nearly 6 percent last year.
“With consumer confidence depressed and prospects of tighter fiscal and monetary policy, consumers’ willingness to purchase big ticket items will diminish,” it says.
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Commercial vehicle sales fell by 8.9 percent year-on-year in January, versus an increase of 8.9 percent year-on-year in December.
“Depressed business confidence and delays in government infrastructure projects are likely to be reflected in stagnating commercial vehicle sales,” says Investec.
Muted consumption and fixed investment growth rates have combined to undermine economic growth, it adds.
The South African Reserve Bank has lowered its gross domestic projections for 2015 to 0.9 percent from 1.5 percent.
The bank also, on Thursday, hiked the repo rate 0.5 percent, taking the prime lending rate to 10.25 percent and placing further pressure on consumers’ pockets. This was as inflation creeps higher and is now at 5.2 percent, and threatening to breach the 3 percent to 6 percent target band.
Investec says further hikes are likely throughout the year as SA is now in an upward interest rate cycle.
IOL