Naamsa August Report – New Vehicles Sales decline by 8.2%

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Naamsa reported that new vehicle sales for the month of August, 2015 – released today for public consumption – declined by 8.2%.

  • Total Naamsa New Vehicle Sales decline by 8.2%
  • Naamsa sales: New Passenger Cars down by 7.8%
  • Naamsa sales: Light Commercial Vehicles tumble by 7.8%
  • Naamsa sales: Medium Commercial Vehicles 11.2% lower
  • Naamsa sales: Heavy Commercial Vehicles decline by 17.9%

Naamsa commented that conditions in the automotive industry continued to be characterised by weakening domestic sales and strengthening vehicle exports.

Given the present constrained economic environment in South Africa, this trend was likely to continue over the medium term compounded by declining business confidence and consumer sentiment. The latest figures showed that the recession in domestic new vehicle sales had accelerated during August, 2015. In contrast, export sales of new motor vehicles continued to hold up well.

In the event, August 2015 aggregate new vehicle sales at 51 055 had declined by 4 555 units or 8.2% from the 55 610 vehicles sold in August last year. Overall, out of the total reported Industry sales of 51 055 vehicles, an estimated 41 456 units or 81.2% represented dealer sales, 12.3% represented sales to the vehicle rental industry, 3.6% constituted sales to government and 2.9% to industry corporate fleets.

Sales of new cars in the consumer sensitive new car market at 34 885 units reflected a decline of 2 958 units or a fall of 7.8% compared to the 37 843 new cars sold in August last year. The slowing new car market was despite attractive incentive packages on offer by most automotive companies. Intense competition in an increasingly difficult trading environment continued to put pressure on margins throughout the automotive value chain.

Naamsa also reported that domestic sales of new light commercial vehicles, bakkies and mini buses during August, 2015 at 13 781 units reflected a fairly substantial decline of 1 159 units or 7.8% compared to the 14 940 light commercial vehicles sold during the corresponding month last year.

Sales of vehicles in the investment dependent medium and heavy truck segments of the Industry had registered double digit decreases. Medium commercial vehicle sales at 889 units and heavy commercial vehicle sales at 1 500 units, reflected a fall of 112 units or 11.2% in the case of medium commercials and a substantial decline of 326 vehicles or a fall of 17.9% in the case of heavy trucks and buses - compared to the corresponding month last year.

Vehicle exports continued to reflect upward momentum. Industry new vehicle exports at 28 069 units during August, 2015 had registered further growth compared to the corresponding month last year rising by 3 080 vehicles or 12.3% compared to the 24 989 export sales in August, 2014. Vehicle exports for 2015 remained on target to improve, in annual terms, by about 20% to a projected industry record export number of about 330 000 for the year (2014: 276 873 export units).

According to Naamsa the underlying trend in domestic new car and commercial vehicle sales remained negative. Despite attractive incentive packages on offer by most automotive companies, trading conditions remained extremely challenging. Vehicle manufacturers with substantial export sales were cushioned to some extent against the impact of the weaker exchange rate. Imports of fully built up vehicles were subjected to the full impact of exchange rate pressures. Intense competition in the increasingly difficult trading environment continued to put pressure on margins throughout the domestic automotive value chain.

Automotive industry vehicle production remained on a relatively firm footing and the higher new vehicle export sales would continue to support the industry’s manufacturing output and contribute positively to South Africa’s balance of payments. The decline in oil prices, all other things being equal, should boost global growth and would support industry exports. Consumers in South Africa had also benefited, however, the relief in the form of lower fuel prices was likely to be short lived as the price of oil appeared to rebound upwards and the Rand remained weak.

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