New passenger car sales hit the skids last month, slumping by 10.8 percent to 29 040 unit sales from the 32 552 cars sold in January last year. File Photo: IOL

PRETORIA – New passenger car sales hit the skids last month, slumping by 10.8 percent to 29 040 unit sales from the 32 552 cars sold in January last year. It is the sixth consecutive month of contraction in new passenger car sales.

The vehicle rental industry last month accounted for 19.9 percent of new car sales, which translated into one in every five new cars sold during the month being a car rental sale.

Azar Jammine, the chief economist at Econometrix, said the slump was not the result of a statistical distortion, because new passenger car sales grew month-on-month by 9.4 percent and there had not been any major decline in sales to the vehicle rental industry or the government.

Jammine said the sales figures were important, because unlike the Purchasing Managers’ Index and other sentiment indicators, they were the first real concrete marker of what was happening in the economy. “The economy can’t be doing too well,” he said.

Jammine said consumers were taking financial strain and were cautious, and did not want to spend money on new vehicles.

“I see this as a sign of a lack of confidence, and people are scared of losing their jobs and further tax hikes in the budget,” he said.

Figures released on Friday revealed that sales last month of new light commercial vehicles, bakkies and mini-buses were virtually unchanged at 11 681 units compared with sales in January last year. Sales of medium commercial vehicles grew by 24.6 percent to 552 units, while heavy truck and bus sales improved marginally by 0.3 percent to 1 101 units.

Jammine said the high year-on-year growth rate in medium commercial vehicles was a distortion, caused by the very low base of sales in January last year, adding that month-on-month sales in commercial vehicles were down very sharply.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said the 0.25 percent point increase in interest rates in November had impacted new car demand because of higher vehicle financing costs. 

Vermeulen said the prospects for domestic new vehicle sales would be affected by the subdued macro-economic environment and pressure on consumers’ disposable income.

He said most automotive companies expected new vehicle sales to be flat during the first half of the year, but sales should improve during the second half of the year following the general election and policy reforms, including expectations of a growth-enhancing budget.

Ghana Msibi, the executive head of sales and market at WesBank, said the decline in passenger car sales last month did not come as a surprise, given WesBank’s outlook for the new vehicle marketing for this year.

Export sales of domestically produced vehicles increased last month by 29.4 percent to 18 289 vehicles from the 14 129 vehicles exported in January last year.