Still no takers for new cars

Johannesburg - New vehicle sales in May were down 34.7% year-on-year compared with a fall of 43.1% y/y in April, figures from the National Association of Automobile Manufacturers of South Africa (Naamsa) on Tuesday showed.

Aggregate Naamsa reported new vehicle sales for May 2009 at 25 819 units reflected a substantial decline of 13 697 units or 34.7% compared with the 39 516 units sold during corresponding month last year.

Factoring in aggregate vehicle sales reported by the AMH Group, the year on year decline amounted to 32.9%.

In May 2009 Naamsa reported new car sales at 16 505 units reflected a decline of 6 170 units or 27.2% compared with the 22 675 new cars sold during May 2008.

Factoring in aggregate new car sales reported by the AMH Group, the year on year decline had amounted to 6 592 units or a fall of 25.9%.

The association commented that sales in all segments of the South African new vehicle market, as well as export sales, had continued to register sharp falls compared to the corresponding month last year.

Overall, out of the total Naamsa-reported industry sales of 25 819 vehicles, 84.1% or 21 708 units represented dealer/retail sales, 2.2% were sales to government, 7.8% represented sales to the car rental industry and 5.9% into industry's corporate fleets.

Sales of Naamsa new light commercial vehicles, bakkies and minibuses at 7 905 units during May 2009 reflected a massive decline of 6 074 units or 43.5% compared to the 13 979 units of the corresponding month last year.

Taking account of the light commercial vehicle sales reported by the AMH Group, the year on year decline amounted to 6 180 units or 41.6%, Naamsa said.

Sales of vehicles in the medium and heavy truck segments of the industry had also registered substantial falls and the May 2009 sales at 528 units and 881 units, respectively, had recorded a massive decline of 380 units or 41.9%, in the case of medium commercials, and 1 073 units or 54.9%, in the case of heavy trucks and buses - compared to the corresponding month last year.

Naamsa said that the continuing weakness in medium and heavy commercial vehicle sales reflected lower investment spending by the private sector.

Lower sales in the sector also reflected continuing difficulty experienced by truck-operating businesses in obtaining finance.

On a year to date basis, 2009 aggregate industry new vehicle sales at 157 141 units reflected a decline of 35.8% compared with the 244 670 vehicles sold during the corresponding five months last year.

Naamsa said that the decline in exports of South African-produced motor vehicles had continued during May 2009 and export sales at 13 612 vehicles had registered a decline of 9 575 vehicles or 41.3% compared with the 23 187 vehicles exported during April last year.

It said that reduced demand in South Africa's major export markets (Eurozone, Japan and the United States) would translate into further declines in the number of vehicles exported by the industry during calendar 2009.

"2009 will represent an extremely difficult year for the entire South African automotive industry. All sectors of the industry - vehicle retail, auto parts manufacturing and vehicle production = continue to experience severe and unprecedented viability challenges," said Naamsa.

It said that recent reductions in interest rates and the resultant lower debt servicing costs should bring relief to hard-pressed consumers and businesses.

"An improvement in the automotive industry domestic operating environment would depend on a revival in consumer spending on the back of lower interest rates as well as on stimulatory government expenditure."

Naamsa said that while further consolidation in new vehicle sales volumes, at current levels, was likely to persist in the short term, an improvement in domestic sales was anticipated towards the end of 2009.

"Any improvement in vehicle exports would depend on a recovery in global economic conditions and, in this regard, preliminary positive signs were emerging in the form of a return of confidence in international financial markets," said Naamsa.

- I-Net Bridge