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Vehicle market could dip further in 2015, with recovery forecast in 2017

26th September 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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The South African new-vehicle market is likely to reach around 630 000 units in 2014, down from the 650 000 units recorded in 2013, says Toyota South Africa Motors (TSAM) president and CEO Dr Johan van Zyl.

Van Zyl is also president of the National Association of Automobile Manufacturers of South Africa.

TSAM marketing and sales senior VP Calvyn Hamman expects the domestic new-vehicle market to dip further in 2015, to around 610 000 units. The 2016 market should remain flat, with slow growth again possible in 2017.

“We are not in a downwards cycle,” says Hamman. “The market is more nervous than negative.”

“This is not doom and gloom,” adds Van Zyl.

The reasons for the downturn are varied, but include issues of affordability, coupled with a cycle of rising interest rates, which impacted on consumer confidence.

The failure of African Bank Investments Limited (ABIL) also does not help, says Van Zyl.

“ABIL did put some liquidity in the market, so it will have an impact on the market – how big an impact we can only guess at this stage.”

He believes ABIL supported the used-car market, through unsecured lending, more than the new-vehicle market.

However, he warns that ABIL’s failure will probably place a damper on how freely other financial institutions make credit available, which may affect the new-vehicle market.

“These institutions may become more conservative in their lending.”

Van Zyl says it is feasible to achieve an uptick in new-vehicle sales in 2017, should positive sentiment return on the back of increased economic growth – which is possible now that the mining and motor industries have returned to work following prolonged strikes.

The manufacturing sector should also work to deliver on its long-standing promise of increased exports, as it has stated is possible with a weaker rand.

Van Zyl is also hopeful that the South African economy will have reached the top of the inflation and interest rate cycle by the end of next year, which should assist the new-vehicle market.

He says it is important for business not to view the current negative economic conditions as the end of the world, but rather as “a process to work through”.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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