Johannesburg - Slowing sales growth of commercial vehicles during July shows that key sectors in the economy are still struggling and new investment is lacking, economists say.
New vehicle sales increased by 20% to 41 367 units in July compared to the same month last year, according to the National Association of Automobile Manufacturers of SA (Naamsa).
Bakkie sales dropped 2.9% in July compared to the same month last year.
Medium commercial vehicles posted a sales increase of 10.4% month-on-month, while heavy truck slaes declined by 1% in July.
"The growth momentum in commercial vehicle segments has slowed down significantly," said Naamsa in a statement on Tuesday morning.
Standard Bank economist Danalee van Dyk said the decline in truck sales is due to a lack of new investment in the economy - both in new private sector projects and government infrastructure.
"I am not saying we are heading towards another economic slowdown," said Van Dyk.
"However, this does mean that there are important sectors of the economy that are hesitant in their recovery," she said.
Truck sales are a lagging economic indicator - they react to economic conditions.
While passenger car sales showed a month-on-month growth rate of 32.4%, the sector is also showing signs of cooling down. The average sales growth for this sector in the first half of the year was 23.3% and July's growth rate is a good 3% below that average.
The decline was anticipated as rental companies shifted their demand to the first half of the year, when they were stocking up for 2010 FIFA World Cup tourism. Another factor driving demand at the start of the year was deferred consumer demand.
Second-half sales will also be hit by the carbon emission tax, which comes into play in September and will translate into an increase of about 2% in new car retail prices. New cars inflation was 7.4% at the start of the year, according to Absa Vehicle and Asset Finance.
Credit crunch still bites The sector is also in wage talks with the National Union of Metalworkers of SA and this could result in work stoppages and resultant product shortages if a solution isn't found soon.
Naamsa expects average sales growth for all vehicle classes this year to be about 15% and at this stage there is no reason to believe that it will be any lower, said industry experts.
Meanwhile, some car manufacturers have pointed a finger at banks for not extending more credit - which they hope will boost car sales further and secure the industry's recovery - to consumers.
Credit extension to the private sector grew at just 0.92% in June this year, below market expectations.
On the other side of the coin, economists have said that South Africans are still choosing to consolidate their debt - which currently stands at about 80% of disposable income - instead of taking on more credit.
Sydney Soundy, managing executive of Absa Vehicle and Asset Finance, said that the group's approval rate has increased by 15% over the past year. He would not disclose what the actual approval rate was.
Other car manufacturers are satisfied with the level of credit extension advanced by banks.
"I don't know whether it's enough, but you have to take into consideration the negative consequences of credit," said Gavin Golightly, national sales manager at Ford Motor Company SA.
"The important thing is we are moving in the right direction and we are happy," he said.
- Fin24.com