New vehicle sales disappoint, expected to remain under pressure | Fin24
 
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New vehicle sales disappoint, expected to remain under pressure

Sep 03 2018 21:20
Lameez Omarjee

New vehicle sales in August declined by 2.5%, compared to the previous year as a result of increasing economic pressures, according to the National Association of Automobile Manufacturers of South Africa (Naamsa).

The association on Monday released the new vehicle sale statistics for August 2018 and noted developments in the socio-political discourse which are not conducive to uplift business confidence or investment sentiment.

The association said that the declining Purchasing Manager’s Index, also released on Monday and was at a 13-month low, reflected that challenging business and trading conditions will persist for the remainder of the year.

As a result, conditions in the domestic new vehicle market were expected to remain under pressure over the short to medium term.

Naamsa warned that the weakening rand exchange rate could impact new vehicle prices. “The recent sharp depreciation of the rand exchange rate would exert upward pressure on general inflation, as well as on new vehicle prices.”

According to the statistics which show that new vehicle sales figures were a “disappointment”, export vehicle sales improved reporting an increase of 7.7% from the previous year.

Domestic sales of new light motor vehicles declined by 5.8% while sales of low volume medium vehicles increased by 9.3% and heavy trucks and buses improved by 18.8%. “Both segments had recorded improvements for the second consecutive month,” Naamsa said.

Of the total industry sales of more than 47 000 vehicles, dealerships were responsible for the majority (80.9%) of sales. This was followed by the rental industry (12.5%), industry corporate fleets (3.7%) and government (2.9%).

Vehicle financier WesBank however expects 3% growth in the market, according to executive head of sales and marketing Ghana Msibi. “However, if the deterioration of the rand to foreign currencies continues as we’ve seen in August, consumers could feel more of a pinch when buying new cars going forward.”

Investec economist Lara Hodes however supported Naamsa’s views that vehicle sales will remain under pressure. This is in light of a weak GDP outcome expected for the second quarter of the year which will negatively impact employment and weigh heavily on consumers, she said.

Statistics South Africa will release the GDP figures on Tuesday.

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naamsa  |  sa economy  |  gdp  |  vehicle sales  |  car
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