[Cartoday]
Naamsa’s new vehicle sales figures make grim reading for June 2008, with a 22 percent drop in sales compared to the corresponding month last year.
The domestic new vehicle sales environment has shown continued weakness, with 39 064 units sold last month. This registered a large decline of 10 956 units or 21,9% compared to the 50 020 vehicles sold during June 2007. This latest Naamsa report states that 85,1 percent or 33 254 units of the 39 064 sold in June were represented by dealer and retail sales, 6,2 percent of sales comprise Naamsa member company fleets, 4,8 percent of sales were made to government and 3,9% representing sales to the car rental industry.Naamsa has stated that the slump in the new car market had worsened further during June, 2008 as a result of the current tight monetary conditions that continue to weigh on consumer spending. June, 2008 new car sales were reported at 22 861 units – this reflects a sizeable decline of 7 964 units or 25,8 percent compared to the 30 825 new cars sold during June, 2007. Perhaps the most telling statistic is that regarding the daily sales rate during June 2008, being the lowest level in over four years.Sales of light commercial vehicles, bakkies and minibuses have also seen a considerable drop, with 12 975 units during June 2008 - a decline of 2 888 units or 18,2 percent compared to the 15 863 unit sales during June 2007.June 2008 also saw a decline in the sales of medium and heavy trucks. This segment experienced mixed fortunes last month, with sales of 1 079 units in the medium truck sector and 2 149 units in the heavy truck sector – a substantial decline of 296 units or 21,5 percent, in the case of medium commercials, versus a gain of 192 units or 9,8 percent, in the case of heavy trucks and buses compared to June 2007.Contrary to the aforementioned declines across a number of sectors, the new vehicle exports have continued to perform well and supported the operations of vehicle and component producers. During May, 2008, the industry exported 23 191 new vehicles - an improvement of 10 182 vehicles or 78,3 percent compared to the 13 004 vehicles exported during June 2007. For the first half of 2008, export sales reflected an impressive year on year improvement of 52,7 percent.The picture is not such a positive one on the domestic new car and light commercial vehicle fronts, with the severe downturn in sales having a major negative effect on automotive dealers and the operations of importers and distributors in South Africa. For the remainder of 2008, Naamsa reports that the domestic car market will remain under serious pressure due to rising interest rates, high levels of personal debt and a slow-down in economic activity aggravated by inflationary pressures.In a recent address, Toyota President and CEO Dr Johan van Vyl summed up the consequences of these economic pressures on the consumer.”Just on a year ago South African consumers were riding a wave of confidence as the promise of sustained economic growth and prosperity were being realised. The downward side of that scenario was an expansion of credit and household debt, that together with the global inflationary pressures, has resulted in the Reserve Bank taking strong action as inflation moved out of the 4-6 percent band and into double figures. The series of interest rate hikes that have taken the prime lending rate from 10,5 percent to 15,5 percent since June 2006 have added further pressure to the cost of living for Mr. Average in South Africa… The result is that private buyers who were very active in the vehicle market in the recent boom years are now carefully considering their [vehicle] purchasing options."Although it is difficult to forecast the duration and extent of these negative pressures on the domestic automotive sector, current and projected major investment projects should put South Africa in a relatively good position to weather the current global commodity price storm and financial market volatility. The combination of a relatively competitive exchange rate and existing vehicle export contracts should also continue to lend support to vehicle and component export activities over the medium term.
