2016 new car sales in 15% decline

The latest aggregated sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa) show that the decline in new vehicle sales continued in December. A total of 41 639 vehicles were sold that month, a year-on-year decline of 15.3%. New vehicle sales for the year are down 11.4%, ending 2016 on 547 442 units – the lowest since 2010.

The December decline reflects the rest of 2016’s performance. Passenger car sales were 14% lower at 28 331 units, while Light Commercial Vehicle sales slowed 17.8% to 11 303 units.

This is in contrast to the overall numbers for the year, which show LCVs performing better than passenger cars with an 8.9% decrease in sales volume for the year ending 2016, with passenger cars losing ground by 12.4% for the period. The effects of dwindling consumer confidence are evident in the decline of dealer channel sales numbers, which fell 15.4% in December and by 11.7% over the course of the year. This was also re- flected in WesBank’s experience of 12.1% fewer applications for new vehicle finance, the bank said.

One of the saving impacts for the new vehicle market in 2016 was the 15.9% increase in sales to the rental companies, despite this channel showing a 19.3% decline in December.

Consumer demand for new cars had decreased sharply as a result of price increases, underperforming GDP growth and household budgets becoming more stressed.

During 2016, new car prices increased 11.03% (as measured by WesBank’s average transaction value) against used car price inflation of 6.83%, driving consumers into the pre-owned market where better value is being realised.

All is not lost for motorists looking for a new car. Consumers can expect to benefit from aggressive marketing initiatives by the manufacturers and dealers as they compete to maintain or grow their sales numbers in 2017. “When looking at buying a car this year, look for the deal, not the car,” said WesBank.