September a bleak month for SA, U.S.
THE recession in the domestic new vehicle market had accelerated significantly during September, according to the latest sales numbers reported by the National Association of Automobile Manufacturers of South Africa (Naamsa).
All major segments reflecting double digit or near double digit declines. Only 47 399 vehicles were reported sold, a substantial decline of 7 904 vehicles (or a fall of 14,3%) compared to the 55 303 vehicles sold in September last year.
Even exports of new motor vehicles had also reflected a year-on-year decline. Aggregate industry export sales at 32 876 vehicles for September, 2016 reflected, somewhat surprisingly, a decline of 2 278 vehicles or a fall of 6,5% compared to the 35 154 vehicles exported in September last year.
Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 12 879 units during September, 2016 had also turned sharply weaker reflecting a decline of 2 243 units or a fall of 14,8% compared to the 15 122 light commercial vehicles sold during the corresponding month last year.
Sales of vehicles in the medium and heavy truck segments of the industry at 783 units and 1 780 units, respectively, had also registered substantial falls and, in the case of medium commercial vehicles, reflected a decline of 77 units or nine percent and in the case of heavy trucks and buses, a decline of 216 vehicles or a fall of 10,8% compared to the corresponding month last year.
More gloom ahead
Naamsa said in a statement dealers expected the negative trend to continue over the medium term, given the present difficult economic environment in South Africa.
“Domestically, the short to medium term outlook remained unfavourable. Double digit new vehicle price increases, low levels of consumer and business confidence and relatively high interest rates would continue to pressurise sales of new motor vehicles, particularly new cars,” said Naamsa.
The only ray in a gloomy cloud is the expectation that momentum of new vehicle exports would improve further over the balance of 2016.
For the year and into 2017, new vehicle exports should contribute positively to South Africa’s current account of the balance of payments reinforced by lower vehicle imports on the back of declines in the domestic market.
One key economic indicator which provided some basis for optimism was the reassuring recovery in South Africa’s Purchasing Manager’s Index in September, 2016 which had recorded an impressive rise of 3,2 points to 49,5 in September — just below the key benchmark of 50. Other major international Purchasing Manager’s indices had also registered welcome improvement.
U.S. also sees less cars sold
South Africa is not alone in suffering a recession in car sales. Reuters reports major automakers in the U.S. reported their second straight decline in monthly U.S. sales, after heavy discounting failed to bring demand up to last year’s robust September sales.
Twenty-four economists polled by Thomson Reuters expect September sales of 17,3 million vehicles in the U.S., with estimated declines ranging up to 2,5% — or over 432 000 vehicles on a seasonally adjusted annualised basis.
Just this monthly drop in unit sales in the U.S. is almost 10 times more than SA’s total sales in September.
As car dealers are doing in South Africa, U.S. automakers are trying to attract buyers with discounts, on average at $3 923, or R53 612 per new vehicle sold.
Eight analysts polled by Reuters expect U.S. sales declines of 2,3% for General Motors Co., 8,5% for Ford Motor Co. and 1,3% for Fiat Chrysler Automobiles. Six analysts polled by Reuters showed expectations that Toyota Motor Corporation’s U.S. sales would show a 1,1% rise; Honda Motor Co., up 0,9%; and then-combined sibling companies Hyundai Motor Co and Kia Motors Corporation, a 0,3% increase.
Nissan Motor Company, the first to report on Monday, said its September U.S. sales were 127 797 vehicles, up five percent, against expectations of analysts who forecast a 0,4% decline.
A weak rand and lack of credit are hampering car sales at new car dealers as well as on used car lots throughout SA.