NEW CAR SALES UNDER PRESSURE

NEW VEHICLE sales declined significantly in February compared with previous months, largely due to load shedding by Eskom, according to the National Automobile Association of SA (Naamsa). Industry sales declined 3 016 units and ended the month on 43 251 units, 6.5 percent down on the same month last year. “While we expect first-half sales to be slow, the market was no doubt rattled by the week-long impact of load shedding at the beginning of the month, which impacted consumer and business confidence,” said Ghana Msibi, WesBank’s executive head of motor. “Reassuringly, however, February sales were up on January despite fewer selling days.” Msibi added that the additional carbon tax and resultant increase in fuel prices during the month is expected to contribute to consumer behaviour in the longer term and their appetite for new vehicle purchases. Passenger vehicle sales took the brunt of the market’s performance, declining 13.3 percent to 27 000 cars. “Concerning is the slowdown in consumer demand as evidenced by passenger car sales through the dealer channel declining 14.4 percent,” Msibi said. “This is also reflected in consumer demand for light commercial vehicles (LCVs), despite this segment increasing.” Having showed more resilience over the past few months than passenger cars, LCV sales increased 7.1 percent to 14 123 vehicles. The dealer channel sales for the segment increased 4.4 percent. “The performance of the LCV segment is reassuring. Not only is this segment up year-on-year, but is 2 423 units up on January, which remained flat on the previous month,” Msibi said. The remains sobering. “The market remains under enormous pressure and is down 7 percent on the first two months of last year, this means a major turnaround is required to meet our forecast for the year of a 1 percent decline.” Affordability remains key to vehicle purchase decisions. Extended contract periods, increasing numbers of balloon payment options and a shift from new to used indicate “household budgets under pressure”, Msibi said.