Johannesburg - Local new vehicle sales slumped by 8.6 percent in October when compared with October last year, reinforcing expectations that the economy is slowing.
Azar Jammine, the chief economist at Econometrix, said the figures were disappointing and showed the economy was slowing down and would be “lucky to grow by 1.5 percent this year”.
Sales of new cars dropped last month by 10.9 percent to 36 175 units from the 40 608 units sold in October last year.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa (Naamsa), said the disposable income of consumers remained under pressure, which negatively affected durable goods purchases despite the extremely attractive incentive packages on offer in the industry.
Sales of new light commercial vehicles declined last month by 4.1 percent year on year to 15 171 units and heavy truck sales by 6.1 percent to 1 834 units, while medium commercial vehicle sales increased by 11.2 percent to 1 064 units.
Jammine said the slump in new car sales was not entirely surprising, because the credit demand figures showed the demand for durable goods was falling quite considerably, particularly hire purchase agreement sales.
“This is borne out by the vehicle sales figures,” he said.
Jammine said the decline in new vehicle sales had also been caused by depressed sales to the vehicle rental industry because of the slump in tourism.
Sales to the vehicle rental industry last month accounted for 12.2 percent of total industry sales compared with 14.3 percent in October last year.
Marc Corcoran, the president of the SA Vehicle Rental & Leasing Association, said the car rental market was stagnating in terms of volumes, but stressed the drop in fleet numbers was more of a reflection of the industry looking to improve vehicle utilisation.
Simphiwe Nghona, the chief executive of the motor division at WesBank, said government channel sales declined a massive 25.7 percent year on year while sales to the rental market saw a similar sharp drop of 23.8 percent compared with October last year.
However, Nghona said sales through the dealer channel, which accounts for consumer sales, only declined 2 percent over the same period.
“The current macroeconomic headwinds are mirrored in this sales decline. With prevailing low confidence levels, corporates are not spending money acquiring new or replacement assets, choosing instead to hold on to their capital.
“With a forecast of subdued growth in the gross domestic product (GDP), coupled with various other economic factors, we don’t expect sales to improve,” he said.
Johannes Khosa, an economist at Nedbank, said the outlook for domestic new vehicles sales next year was unfavourable. “Consumers are facing broad-based financial pressures and this will keep sales weak. Commercial vehicle sales are also likely to remain subdued,” he said.
Industry export sales dropped last month by 8.6 percent to 54 244 units from the 59 335 units in October last year.
Vermeulen said vehicle exports had been affected by special circumstances caused by the run out of the previous Ford Ranger model and the new model being in the early stage of its launch phase.
But he confirmed the vehicle exports reported by various other manufacturers had also declined, suggesting the advent of a possible slowdown in global markets.
However, Vermeulen said vehicle exports for this calendar year remained on target to reach a record of about 335 000 units.