Johannesburg - New vehicle sales started the year weakly, with almost all major sectors recording a decline in sales year on year last month.
Figures released yesterday showed new car sales fell last month to 38 008, down by 7 percent from January last year.
The decline in new car sales occurred despite strong sales to the car rental industry, with the National Association of Automobile Manufacturers of SA (Naamsa) indicating that car rental companies had accounted for 18.1 percent of total new cars sold last month.
Sales of new light commercial vehicles, bakkies and minibuses declined last month by 6.6 percent year on year to 13 145 units, while medium commercial vehicles were unchanged at 780 units and heavy truck and bus sales were 8 percent lower at 1 092 units.
Naamsa executive director Nico Vermeulen said yesterday that new vehicle sales were likely to be challenged this year by above-inflation increases in average new vehicle prices, the slowdown in the economy and rising interest rates.
Vermeulen said Naamsa therefore anticipated a challenging trading environment for new vehicles characterised by a consolidation in sales numbers at best around levels recorded last year.
Exports of locally produced new vehicles fell last month to 13 960 units, down 19.7 percent from January last year.
Vermeulen said this was largely due to the lack of export sales by Mercedes-Benz South Africa as it retooled for production of the new C-Class.
He said export sales during the first half of this year would continue to be affected by the absence of any contribution by Mercedes-Benz SA, but industry export sales, particularly light commercial vehicle exports, should reflect strong growth from the middle of this year.
Sydney Soundy, the head of vehicle and asset finance at Standard Bank, was not surprised by the weak sales performance in the new vehicle market last month.
Given the conditions at the end of last year, a tougher year was anticipated, he said.
Soundy said the economy was unlikely to grow more than 2.2 percent this year and this, together with increasing fuel prices, toll fees, inflation and the indebtedness of consumers, meant it would be a tough year for the new vehicle market.
Further interest rate hikes and the devaluation of the rand would have a significant impact on the market, he added.
Kamilla Kaplan, an Investec economist, said the slowing momentum in car sales growth established in the second half of last year had been sustained into this year, with the 6.8 percent year-on-year contraction in total vehicle sales last month the worst in almost three years.
Kaplan said weakening sales growth had been particularly evident in the passenger vehicle segment, which was in line with the increased financial pressure experienced by households, depressed consumer confidence and the slowdown in credit growth that had inhibited the willingness and ability to purchase big-ticket items.
She said there was scope for the growth momentum in vehicle sales to dissipate further.
“The ease with which consumers can take on debt to finance consumption, particularly of big-ticket items, has diminished. Confidence of both households and business is generally suppressed although downside risks to economic growth should limit the scope for monetary tightening,” Kaplan said. - Business Report