Last year saw new-vehicle sales in South Africa decline for the first time since 2009, when the market dropped a whopping 25.9% in response to the then global economic crisis.

Unaudited data released by the Department of Trade and Industry earlier this month showed that South African new-vehicle sales decreased by 0.7%, to 644 523 units, in 2014 over 2013.

New-vehicles sales reached 395 222 units in 2009.

Commenting on the data, the National Association of Automobile Manufacturers of South Africa (Naamsa) says the slowdown in the domestic economy, two recent interest rate increases, as well as above-inflation new- vehicle price increases are to blame for the marginal decline.

The new-passenger-car market contracted by 2.5% in 2014, compared with 2013, to 439 179 units, while the light commercial vehicle segment grew by 3.4%.

Sales of medium commercial vehicles declined by 4.9%, while sales of heavy trucks and buses improved by 6.2%.

“2014 turned out to be a difficult year for the South African automotive industry, with domestic new-vehicle sales under pressure, particularly at dealer level, despite attractive incentives and a strong contribution by the car-rental sector, which accounted for an estimated 14% of new-car sales during the year,” states Naamsa.

Industry trading conditions remained “intensely competitive”, adds the association, with more than 60 brands and 2 962 model derivatives making a play for consumers’ wallets in the new car and light commercial vehicle sectors.

Naamsa says preliminary estimates are that the local motor industry’s new vehicle- related sales turnover grew by about 9%, to R224-billion, in 2014 over 2013, based on sales volumes and an average estimated increase of around 10% in new-vehicle pricing.

New-vehicle export sales are estimated to have added a further R65-billion to industry revenue in 2014.

Naamsa adds that 2014 new-vehicle exports were badly bruised by a four-week strike in South Africa’s metal and engineering industry during the middle of the year, with production losses estimated at 16 000 vehicles.

As a result, vehicle exports improved by a mere 0.2%, to 276 874 units, compared with 276 404 vehicles exported in 2013.

Outlook for 2015
Naamsa believes exports can improve by around 50 000 vehicles, or about 17%, compared with 2014.

The association says exports are projected to reach 325 000 units in 2015, increasing further to 375 000 units in 2016.

Demand for light commercial vehicles in African markets is expected to show above average growth, supporting exports from South Africa.

The bad news, however, is that the outlook for the domestic market in 2015 remains gloomy.

The best-case scenario will see only “marginal volume growth in domestic sales”, notes Naamsa.

This scenario is based on an improvement in South Africa’s economic growth rate to between 2% and 2.5%, relative stability in automotive industry industrial relations, stable interest rates and credit ratings, as well as prospects for moderating consumer price inflation.

However, these positive factors may be offset by higher than inflation new-vehicle price increases, as a result of the weakness in the rand against major international currencies.

The depreciation of the rand has resulted in “significant” cost increases in imported parts used in the production of locally manufactured vehicles, as well as in imported built-up vehicles, notes Naamsa.

Should all market expectations play out as expected, domestic new-vehicle sales can improve by around 4% in 2015, says the association, with all vehicle segments improving on their performance in 2014.

Domestic Production to Improve
Taking into account an expected improvement in export volumes, domestic vehicle produc-tion is expected to increase from around 542 000 vehicles in 2014, to around 600 000 vehicles in 2015 – an improvement of 10.7%.

Domestic production in 2013 reached roughly 550 000 units.