Vehicle sales take heavy knock in 2016

But prospects for year ahead more promising

New vehicle sales crashed by 11.4% last year – but they should pick up moderately in the months ahead, the National Association of Automobile Manufacturers of SA (Naamsa) said yesterday.

It was commenting on sales figures for the entire year and for last month.

“Industry domestic sales ended 2016 on a weak note with aggregate industry new vehicle sales for December at 41 639 units,” Naamsa said.

This showed a decline of 7 519 vehicles (15.3%) compared with total new vehicle sales of 49 158 units during the same month in 2015.

“Last month’s new passenger car market and light commercial vehicle market reflected a year-on-year volume change of -14% in the case of cars and -17.8% in the case of light commercial vehicles.

“Sales of medium and heavy commercial vehicles declined by 18.2% year on year,” Naamsa said

But on a more positive note, the figures showed that export sales had recorded an improvement last month to 18 668 units. That was a gain of 1 222 vehicles, or 7%, compared with 17 446 vehicles exported in the same month last year.

Looking at the full year, Naamsa said that, for the third year in succession, new vehicle sales had recorded a year-on-year decline.

Reasons for this included the slowdown in the domestic economy, above-average inflationary pressures, increases in interest rates and pressure on consumers’ and household disposable income.

Low levels of consumer confidence had also contributed to the double-digit decline.

Aggregate sales last year fell by 11.4% to 547 442 units compared to 617 648 in 2015.

“Overall, 2016 turned out to be another extremely difficult year for the South African automotive industry with domestic new vehicle sales progressively under pressure,” Naamsa said.

This was felt particularly at dealer level, despite attractive sales incentives and a strong contribution by the car rental sector which accounted for an estimated 16.3% of new car sales during the year.

Despite an estimated average increase of about 14% in new vehicle prices, turnover in the industry dropped by about 2% to R233-billion for the year.

“On top of that, new vehicle exports were estimated to have added R105-billion to total industry 2016 revenue,” Naamsa said.

On the positive side, the organisation said: “Vehicle exports represented the highest annual industry export figure on record and total exports at 344 822 were up on the 333 847 vehicles exported in 2015.”

Depending on the global economy, the increase in export sales should improve this year by about 10% to reach a conservative projection of 375 000.

Overall, Naamsa said, the decline in domestic sales had been offset to a limited extent by the continued growth in vehicle exports which in turn assisted in sustaining utilisation capacities and employment levels of vehicle manufacturers.

Looking ahead, Naamsa said: “This year is expected to be another difficult one . . .

“But a modest improvement in new vehicle sales is expected during the second half of 2017.

“Industry production levels, on the back of expected growth in vehicle exports, should, however, remain in an upward phase.”

The association listed positives as being an expected improvement in GDP growth to about 1.5% (from 0.4% last year) and a rise in gross domestic expenditure to more than 2% (from -0.3%).

There should also be growth in private consumption expenditure to about 2% (from 0.8%) and in fixed investment to about 2.2% (from -2.5% in 2016).

On the negative side, elevated political tensions were likely to continue to weigh on business confidence and the expected increase in taxes in this year’s budget would erode real purchasing power.

There was also a wide range of international factors that could have negative consequences.

Nevertheless, factoring in expected improvement in exports, domestic production was expected to show an increase from 604 000 last year to 641 000 – an improvement of about 6%.

One thought on “Vehicle sales take heavy knock in 2016

  • January 11, 2017 at 9:38 am
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    The money wastage by metro and parliament members has been controlled now, so less fancy cars will be bought in future!!

    Reply

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