New vehicle sales decline by 3.4%
Limited economic growth and high unemployment pose threats
DOMESTIC sales of new vehicles in the first quarter of 2014 fell 3.4% compared with last year‚ according to figures released on Tuesday by the National Association of Automobile Manufacturers of South Africa (Naamsa).
Sales from January to March were down to 160 138 from 165 806. Cars took the biggest hit‚ showing a 5% decline. Light commercial vehicles‚ mainly bakkies‚ were down 0.5%‚ medium commercials 2‚5% and heavy trucks 1.6%. Extra-heavy trucks increased 12.8%‚ reflecting continued infrastructure investment‚ and buses rose 10.8%.
March sales actually held up relatively well: they were down 0.2% on the corresponding 2013 month‚ after comparative falls of 6.8% and 3.1% in January and February.
One reason for March’s performance may be that local manufacturers are finally able to meet demand.
According to financier WesBank‚ they have made up the production losses they suffered during the extended motor industry strike from August to October last year.
Nevertheless‚ analysts think that for 2014 as a whole‚ the market will be down slightly after four previous years of growth.
There were some anomalies in Tuesday’s Naamsa figures.
Chinese brand Great Wall Motors‚ which previously gave a combined figure for monthly sales of all its cars and bakkies‚ has begun to report them separately. And Toyota and Hyundai have reclassified a number of their vehicles from commercial to passenger.
So some of the sectoral numbers are marginally skewed.
But there is no hiding the pressure facing the market.
Naamsa director Nico Vermeulen said that consumers remained under pressure because of high levels of indebtedness and increases in energy and transport costs‚ including e-tolls on Gauteng’s freeways.
As a result‚ the overall market in 2014 is likely to be flat at best “and might even show modest declines”.
Standard Bank’s head of secured lending Steven Barker said limited economic growth‚ high unemployment and rising inflation all posed threats to new vehicle sales.
However‚ motor companies had held back on price increases despite the weakening rand adding to their costs. Nearly two-thirds of new cars are imported.
This year’s slight rise in interest rates appeared to have been absorbed by the market.
According to WesBank‚ the market was initially unsettled by an increase of 0.5% in January “but confidence has subsequently returned”.
Barker cautioned‚ however‚ that what was still a “favourable” financing environment “is likely to change with the increasing likelihood of upward movement of interest rates in the course of the year”. — BDLive