NAAMSA COMMENT ON THE AUGUST, 2013 SOUTH AFRICAN NEW VEHICLE SALES STATISTICS
In amplification of the new vehicle sales statistics for the month of August, 2013 – released today for public consumption on the website of the Department of Trade & Industry – the Association commented that the August, 2013 new vehicle sales were largely in line with industry expectations. By virtue of existing inventory levels in the industry, the impact on domestic sales of the current industrial action at the seven major vehicle manufacturing plants had to date been muted. The main impact of the strike action to date had been on the industry’s export performance and particularly the export operations of BMW and Ford Motor Company which had been negatively affected due to other industrial action which preceded the current industry strike – now in its third week. The full negative impact would be reflected in the September, 2013 domestic sales and particularly on industry export numbers.
After four years of growth in the domestic market, aggregate sales continued to register modest growth on a year to date basis. In the event, year to date domestic sales showed an improvement of 5,9% compared to the corresponding eight months of 2012. Aggregate Industry sales of 56 115 units for August, 2013 reflected a decline of 0,3% or 155 vehicles from the 56 270 units sold in August last year. Export sales had registered a decline falling by 22,9% in volume terms.
Overall, out of the total reported Industry sales of 56 112 vehicles, 46 442 units or 82,8% represented dealer sales, 11,4% represented sales to the vehicle rental Industry, 3,3 % to Industry corporate fleets and 2,5% to government.
During August, 2013 a total of 38 892 new cars were sold which represented a decline of 1 487 units or a fall of 3,7% compared to the 40 379 new cars sold in August last year. The car rental industry had again contributed positively to the August sales numbers and accounted for 15,3% of new cars sold during the month.
Sales of industry new light commercial vehicles, bakkies and mini buses at 14 376 units during August, 2013 reflected an increase of 726 units or 5,3% compared to the 13 650 light commercial vehicles sold during the corresponding month last year.
Sales of vehicles in the medium and heavy truck segments of the Industry at 1 038 units and 1 809 units, respectively, had recorded an increase of 201 units or 24,0% in the case of medium commercial vehicles, and an increase of 405 units or 28,8% in the case of heavy trucks and buses – compared to the corresponding month last year.
The excellent performance in sales of light, medium and heavy trucks suggested higher levels of investment spending in the economy and was in part related to infrastructural development projects.
Industry new vehicle exports during August, 2013 at 19 284 vehicles had registered a substantial decline of 5 740 units or a fall of 22,9% compared to the 25 024 vehicles exported in August last year. This could be attributed to the current strike at the seven major manufacturing plants and further production losses would be reflected in anticipated lower export numbers for September. As a result, annual projected industry export sales numbers would be revised downwards. One of the negative consequences of the current strike action was that it undermined South Africa’s status as a reliable supplier to international export markets and could well negatively affect future export contracts being awarded to South African automotive manufacturers. Labour stability represented a key consideration in decisions by multi-national corporations to allocate vehicles for production in South Africa. Unless the strike action was settled in the next few days, the damage to future prospects and on foreign investment sentiment could be far reaching and take years to re-address.
Domestically, expectations of lower economic growth and above-inflation new vehicle price increases would contribute to a more difficult trading environment. Despite a less promising outlook for the automotive sector for the balance of the year, the year as a whole would still represent the second or third best year on record in terms of domestic sales. The prevailing low interest rate environment would continue to lend support to the domestic market together with replacement demand, the highly competitive trading environment, ongoing attractive incentives and high technology new model introductions.
Export sales remained a function of the performance and direction of global markets and a number of regions offered above average growth opportunities. These included North America, Asia and Africa. Hopefully the industry strike would be resolved in the near future so as to minimize the negative consequences associated with prolonged industrial action and enable South African vehicle manufacturers to supply the needs of customers in highly competitive international markets.