Ve­hi­cle sales defy deep re­ces­sion

Growth of 0.9 per­cent in June

The Star Early Edition - - BUSINESS NEWS - Roy Cokayne

SALES of new ve­hi­cles last month achieved year-on-year growth for only the sec­ond month so far this year, sug­gest­ing that the econ­omy was not yet in a deep re­ces­sion.

Fig­ures re­leased yes­ter­day showed that sales of new cars de­clined 2.2 per­cent last month to 28 639 units, from 29 269 units sold in June last year.

How­ever, sales of new light com­mer­cial ve­hi­cles, bakkies and minibuses rose 8 per­cent year-on-year last month to 14 278 units, while sales of medium com­mer­cial ve­hi­cles rose 4.4 per­cent to 800 units.

Sales of heavy trucks and buses dropped 2.8 per­cent to 1 652 units.

Over­all, the sale of new ve­hi­cles in­creased 0.9 per­cent year-on-year to 45 369 units last month.

Azar Jam­mine, the chief econ­o­mist at Econometrix, said it was “rea­son­ably en­cour­ag­ing” that the mar­ket had achieved year-on-year growth.

“De­spite a lot of neg­a­tive news that had to be di­gested in the course of June, the mar­ket held up rea­son­ably well,” he said.

Jam­mine said June was only the sec­ond month this year in which new ve­hi­cle sales had achieved year-on-year growth.

He said the year-on-year growth in March was be­cause a num­ber of pub­lic hol­i­days fell in March last year, whereas this was not the case this year.

Jam­mine said Econometrix had ex­pected year-on-year growth in new ve­hi­cle sales last month, which sug­gested that the econ­omy was not col­laps­ing com­pletely.

“You would not ex­pect pos­i­tive growth (in new ve­hi­cle sales) in the midst of a deep re­ces­sion. This ap­plies to pas­sen­ger ve­hi­cles, but es­pe­cially to com­mer­cial ve­hi­cle sales,” he said.

How­ever, Jam­mine ex­pected new ve­hi­cle sales to re­main at their cur­rent levels, with marginally neg­a­tive growth for the full cal­en­dar year.

“New ve­hi­cle sales were -1.3 per­cent lower year-on-year for the first half of the year. You can’t look for any ma­jor im­prove­ment, be­cause of the de­pressed eco­nomic en­vi­ron­ment and low con­sumer and busi­ness con­fi­dence levels,” Jam­mine said.

Nico Ver­meulen, the direc­tor of the Na­tional Association of Au­to­mo­bile Man­u­fac­tur­ers of South Africa, said the out­look for new ve­hi­cle sales in the sec­ond half of the year re­mained un­cer­tain.

Ver­meulen said po­lit­i­cal ten­sions and sub­dued eco­nomic growth continued to im­pact neg­a­tively on busi­ness con­fi­dence and con­sumer sen­ti­ment.

He added that the chal­lenges con­fronting South Africa were var­ied and com­plex, and con­certed steps were re­quired by busi­ness, gov­ern­ment and labour to cre­ate a more in­vestor-friendly en­vi­ron­ment to boost growth.

“Do­mes­tic new ve­hi­cle sales were closely cor­re­lated with the over­all per­for­mance of the econ­omy and con­fi­dence levels. At this stage, do­mes­tic new ve­hi­cle sales for 2017 were likely to re­main flat at best,” he said.

Ex­port sales of lo­cally pro­duced ve­hi­cles im­proved 1.4 per­cent year-on-year last month to 31 631 ve­hi­cles, from 31 202 ve­hi­cles ex­ported in June last year.

Ru­dolf Ma­honey, the head of brand and com­mu­ni­ca­tions at WesBank, said growth in new ve­hi­cle sales in the dealer chan­nel was fu­elled by ag­gres­sive mar­ket­ing in the form of sales in­cen­tives and end-of-quar­ter deals.

“The strong light com­mer­cial ve­hi­cle sales fig­ure is at­trib­uted to these be­ing recre­ational ve­hi­cles for con­sumers, as well as sought-af­ter ve­hi­cles for busi­nesses and gov­ern­ment,” he said.

Nicholas Nkosi, the ex­ec­u­tive head of Stan­dard Bank ve­hi­cle and asset fi­nance, re­tail and busi­ness bank­ing, said de­spite the 2.2 per­cent de­cline in new pas­sen­ger ve­hi­cle sales, there had been a steady im­prove­ment in the sale of cars in the past three months, while sales of used cars had continued to show growth and re­silience.

PHOTO: SIM­PHIWE MBOKAZI

Ve­hi­cles for sale at The Glen shop­ping cen­tre south of Jo­han­nes­burg.

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