Motor dealers’ road to recovery needs clear lanes from Treasury
The SA franchised motor dealer environment is under huge pressure. The market is down and a growing number of dealerships are in ICU with a direct potential loss of jobs as a result.
In September 37,707 new vehicles were sold at dealer level, compared to 38,326 sold in September 2018, a variance of -1.6% year on year. While this may seem an insignificant difference at first glance, it is representative of a market headed on a downward trajectory towards a point of difficult return.
Shifting to a broader year-todate focus, the numbers paint a clearer picture — 326,295 new vehicles were sold on dealer floors to September showing a 3.7% decline for the first nine months of 2019 compared to the same time frame last year. This represents 12,555 fewer vehicles sold in 2019, or, just under 1,400 units a month. This is a significant number.
With the recent 0.8% decline in household expenditure, the mercurial rand and GDP at its lowest since the 2008 global financial crisis, the National Automobile Dealers’ Association (Nada) maintains there are critical developments on the immediate horizon which could be the building blocks to boost business and consumer confidence.
The Treasury’s white paper, titled “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for SA”, as radical as it may seem, is a vital step towards economic recovery. The government needs to commit to this kind of action.
The paper outlines a series of themes and the contribution of growth reforms within each that prioritise economic transformation, inclusive growth and competitiveness. Nada supports the ideals and pillars of the proposed themes, but the application proposed may in certain areas have unintended consequences, in our opinion.
Finance minister Tito Mboweni’s
medium-term budget statement is an important one, as it should seek to pave the way forward to economic reform in the short term, including a much needed reduction in government spending to reduce the budget’ Moody s deficit. will be Ratings scrutinising agency the budget before it takes a view on SA’s investment grade rating, which it will decide upon on Friday week, November 1.
The sudden announcement by Eskom of rolling blackouts could not have come at a worse time for business and will certainly exacerbate the economic slowdown and consumer confidence.
A stable path being laid for debt-laden Eskom is critical and should hopefully include the splitting of the utility into three separate units. The implementation of structural reforms in the finance minister’s budget will go a long way towards gaining a modicum of growth and stability and alter the current discourse plaguing SA. This cannot be underemphasised.