New vehicle sales slumped dramatically in July, reflecting the current difficult economic conditions in South Africa.
That is according to the National Association of Automobile Manufacturers of South Africa (Naamsa) on Monday, commenting on the Department of Trade and Industry’s latest release of new vehicle sales statistics.
Only 44,883 new vehicles were sold in July, which was a “substantial decline of 9,222 vehicles or a fall of 17% compared to the 54,105 vehicles sold in July last year”, said Naamsa.
It said there were 29,042 industry export sales in July, which was a marginal improvement of 684 vehicles or an increase of 2.4% compared to the 28,358 vehicles exported in July last year.
About 36,947 units or 82.3% represented dealer sales, 13.1% represented sales to the vehicle rental industry, 3.0% represented industry corporate fleet sales and 1.6% sales to government, Naamsa explained.
“The new car market had experienced severe pressure … and at 29 007 units reflected a decline of 7,520 cars or a fall of 20.6% compared to the 36 527 new cars sold in July last year,” said Naamsa.
“This was again despite a strong contribution by the car rental industry, which had accounted for 18.5% of new cars sold during the month. Margins at auto industry retail/dealer level also remained under pressure.
“The lower levels of new vehicle sales represented a reflection of current difficult economic conditions in South Africa,” said Naamsa.
“The decline in the Reserve Bank’s leading business cycle indicator to 90.8 in May from 90.9 in April took the index to its lowest level since the 2008 global financial crisis,” it said.
“The decline reinforced the recent decision by global financial institutions and the Reserve Bank to revise downwards South Africa’s growth outlook for 2016 and 2017.”
Naamsa said the decline in the latest Purchasing Managers Index also did not augur well for short to medium terms prospects. One positive feature was the imminent significant reduction in the price of fuel.
“In contrast, export sales were expected to show modest upward momentum over the balance of the year. New vehicle industry production should therefore hold steady with 2016 export sales numbers expected to expand to around 351,000 units from the 333,802 export sales in 2015.”