CAPE TOWN – New vehicle sales continued to decline during November, noticeably impacted by the interest rate increase in the third week of the month.
According to the National Automobile Association of South Africa (Naamsa), the new vehicle market declined 4.6 percent to 47 486 units compared to November 2017, meaning sales year-to-date had declined 0.9 percent.
“While consumer confidence looks to be reasonably positive, the interest rate hike during the month would have impacted sales during November negatively,” said Ghana Msibi, WesBank executive head of sales and marketing. “Further planned rate increases over the next 12 months will not bode well for new vehicle sales.”
Although the market numbers are down, consumer demand appears to remain robust. “Considering WesBank application data, consumers are clearly keen to buy cars,” said Msibi. “However, a lot of that demand has shifted to the used car market (69 percent of all applications were for used cars), indicative of the stress in the new car market as well as the worsening household situation with regard to disposable income and general affordability.”
WesBank data also showed that consumers were holding onto their cars for longer, combatting South African motorist’s affordability challenge. “While consumers have consistently financed their cars near the maximum period allowed for the past two years, the average period before settlement of those contracts has increased by six months,” said Msibi.
New passenger cars sales declined 5.4 percent compared with November last year to 31 054 units. Dealer channel sales have largely supported the market this year, while re-fleeting by the rentals towards the end of this year has buoyed sales to some extent.
Government has clearly been more prudent in their expenditure with fewer passenger car sales recorded during 2018, rather showing investment in commercial vehicles, a positive indication of industrialisation and potential economic improvement.
Light Commercial Vehicle sales slowed 6.1 percent year on year to 13 695 units, but positive sentiment in medium, heavy and extra heavy commercial vehicles gives some assurance towards economic activity in the country.