2016 looks like being one rough ride
New-vehicle sales in 2015 were worse than those of 2014 and with the Rand seemingly in freefall it could get a lot worse before it gets better turning to used-car market as economy bites
DESPITE a relatively strong showing by the light-commercial market, total new vehicle sales in South Africa slumped by 4.1 percent last year compared to 2014, says the National Association of Automobile Manufacturers of SA (Naamsa).
Cash-strapped South Africans, under pressure from rising interest rates and inflated prices, bought a total of 617 927 new vehicles in 2015 – 26 332 less than the 644 359 sold in the previous year. Naamsa estimates that new-vehicle prices rose by an average of 6.5 percent across the entire market, comprising 52 brands and 2 595 individual models.
The passenger-car segment was the hardest hit with 412 826 sales, showing a decline of 5.9 percent compared to 2014, even with attractive dealer incentives and a hefty contribution from the rental-car sector which accounted for around 12.5 percent of total new-vehicle sales. Light-commercial sales took up some slack with sales of 174 490 units reflecting an increase of 0.4 percent year on year.
While local sales figures paint a bleak picture of the South African motor industry, the export market is booming. Last year’s total of 337 Osborne, head of Gumtree Automotive, the ratio of new cars sold compared to used cars sold was roughly 0.5 used to 1 new in 2005 but has since risen to 1.7 used cars sold for every new car sold.
Economising might be a primary driver for the trend, says Osborne.
“The affordability and variety of 748 units exported was the highest in history, and showed a healthy 20.5 percent increase on 2014’s figure of 276 936.
Naamsa predicts export sales could improve by a further 12.5 percent or 42 000 vehicles this year.
The outlook for this year’s domestic market is less inspiring however, with household budgets expecting to feel the pinch of even more interest rate hikes and increases in the prices of not only cars but also electricity, water and fuel. With a continuously weakening rand value, Naamsa anticipates local new-vehicle sales to drop by a further 3-5 percent in 2016. the second-hand market, coupled with the ease of entry into private sales, are encouraging sellers to become their own brokers as it were, and dealerships are pushing used car sales to make up for the shortfall of declining new sales.”
“Vehicle sales, both new and used, are a good indicator of the state of the economy. Credit health and the Gross Domestic Product (GDP) growth are low and South African households are putting off purchasing new vehicles as a result.”
Overall, Osborne remains optimistic about both new and used car sales in South Africa.
“We have to remember that the country has enjoyed many positive new car sales years, which is why the figures seem grim. However, manufacturers and dealerships are becoming more innovative to ensure that the replacement loop remains active. Better deals, improved cars and other aggressive marketing initiatives will keep South Africans firmly in the drivers’ seat for years to come.”