Vehicle manufacturers say another difficult year lies ahead
SOUTH African vehicle manufacturers are bracing themselves for another difficult year for the domestic industry but expected a modest improvement in the second half of the year, the National Association of Automobile Manufacturers of South Africa (Naamsa) says.
In a statement yesterday, Naamsa said the 2017 projections reflected an expected improvement in gross domestic product to about 1.5 percent, up from 2016’s 0.4 percent.
“Improvement in growth prospects is premised on the easing in drought conditions, the improvement in commodity prices, a decline in inflationary pressures on the back of a stronger rand, as well as recent improvements in the purchasing managers’ indexes and the Reserve Bank’s leading indicator. On the negative side, domestically, elevated political tensions are likely to continue to weigh on business confidence and the expected increase in taxes in this year’s budget will erode real purchasing power,” Naamsa said.
New vehicle sales fell 15.3 percent year-on-year to 41639 units in December, while exports soared by 1222 units (7 percent) to 18668 units year-onyear, which is a continuation of the contrasting performances between the local and export markets.
Naamsa said sales of new passenger cars were down 14 percent, while light commercial vehicle sales plummeted 17.8 percent.
Sales of medium and heavy commercial vehicles declined by 18.2 percent in December last year, compared to December 2015.
It was the third year in succession that new vehicle sales recorded a year-on-year decline.
“The slowdown in the domestic economy, above average new vehicle inflationary pressures, increases in interest rates, pressure on consumers’ and household disposable income and low levels of consumer confidence had contributed to a double-digit decline in annual domestic sales volumes,” Naamsa said.
Naamsa said 2016 turned out to be “another extremely difficult” year for the South African automotive industry, with domestic new vehicle sales progressively under pressure, particularly at dealer level, despite attractive sales incentives and a strong contribution by the car rental sector which accounted for an estimated 16.3 percent of new car sales during the year.
Industry trading conditions had remained intensely competitive characterised by pressure on dealer margins.
“Preliminary estimates of 2016 motor industry new vehicle related sales turnover indicated a decline of about 2 percent, taking account of sales volumes, changes in mix and a weighted average estimated increase of about 14 percent in new vehicle prices – to reach about R233 billion.
“Industry new vehicle export sales were estimated to have added a further R105bn to total industry revenue in 201.”
The organisation expected export sales to improve by 10 percent (30 000 vehicles) this year “assuming further improvement in the global economy”. It said the improved performance by the exports offset “to a limited extent” the decline in domestic sales.
South African vehicle manufacturers are bracing themselves for another difficult year but expect a modest improvement in the second half of the year.