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Cape Town – The age of the consumer “in terms of choices and options” is upon us, a banking expert said on Monday after results showed falling sales figures in the automobile industry.
South Africa's new vehicle sales fell 3.39% year-on-year (y/y) in April to 44 503 units, data from the trade department showed on Monday, which had been affected by the multiplicity and configuration of public holidays during the month.
“This is what we will start seeing as it is a reflection on the new car sales market,” said Nicholas Nkosi, head of vehicle and asset finance for personal markets at Standard Bank.
The month of April 2015 showed a decline in sales of 19.69% compared to March 2015, said Nkosi.
“Public holidays were partly due to it, as people would have pre-ordered in March,” he told Fin24 by telephone from Johannesburg, adding that May would be the real benchmark for the year.
“The consumer is under a lot of financial pressure and as result people are looking for good bargains in second-hand market.
“It creates a lot of competition between the new and the used. They are trying to drop their prices and make their offer more compelling,” he said. “The consumer will benefit out of all of this.”
New car sales fall by 1.9%
Domestic new vehicle sales, particularly all categories of commercial vehicle sales, had been affected, the National Association of Automobile Manufacturers of South Africa (Naamsa) said in a statement.
“Supported by incentive packages, new car sales had held up relatively well,” it said.
The April, 2015 new car market at 30 184 units reflected a decline of 594 units or a fall of 1.9% compared to the 30 778 new cars sold in April last year.
“Intense competition in a challenging, difficult trading environment had resulted in incentive packages to promote new vehicle sales,” said Naamsa. “Furthermore, a modest recovery in the used vehicle market had also been noticed.”
Marginal volume growth
At this stage, Naamsa continued to project marginal volume growth in domestic sales based on an assumption of a slight improvement in South Africa’s economic growth rate, relative stability in automotive industry industrial relations, stable interest rates and unchanged credit ratings.
“New vehicle industry production would continue to benefit from projected higher export numbers,” it said.
Overall, out of the total reported industry sales of 44 503 vehicles, an estimated 38 780 units or 87.2% represented dealer sales, 6.3% constituted sales to government, 4.2% to industry corporate fleets and 2.3% represented sales to the vehicle rental industry.
Domestic sales of new light commercial vehicles, bakkies and mini buses during April, 2015 at 12 077 units reflected a decline of 774 units or a fall of 6.0% compared to the 12 851 light commercial vehicles sold during the corresponding month last year.
Sales of vehicles in the investment-driven medium and heavy truck segments of the Industry had registered declines.
March correction
Medium commercial vehicle sales at 777 units and heavy commercial vehicle sales at 1 465 units, reflected a fall of 38 units or 4.7% in the case of medium commercials, and a decline of 107 vehicles or a fall of 6.8% in the case of heavy trucks and buses - compared to the corresponding month last year.
“If you look at the business side, there is a 5% decline in vehicle sales,” said Nkosi. “It’s not something to be too concerned about. There was a 9% increase last month, so it’s a correction of that. It’s nothing to worry about at this stage.”
Vehicle exports had continued to contribute positively to South Africa’s current account of the balance of payments.
Industry new vehicle exports at 23 615 units during April, 2015 had again registered exceptionally strong growth compared to the corresponding month last year rising by 6 813 vehicles or 40.5% relative to the 16 802 export sales in April, 2014.
Vehicle exports for 2015 were on target to improve by around 25% in volume terms to a record export number of about 325 000 for the year.
“The export market is showing growth and will continue to be the performing star,” said Nkosi.
