Data released by the Department of Trade and Industry on Monday shows that South African new-vehicle sales declined for the third year in a row in 2016.

Sales dropped by 11.4%, to 547 442 units, compared with 617 648 units in 2015. New-vehicle sales fell 4.1% in 2015 and 0.7% in 2014.

Looking at the various segments, 2016 new-passenger-car sales plummeted by 12.4%, sales of light commercial vehicles dropped by 8.9%, medium trucks by 18.7% and heavy trucks and buses by 7.4%.

Commenting on the statistics, the National Association of Automobile Manufacturers of South Africa (Naamsa) said in a statement that sales figures were pushed into the red by above-average new-vehicle price jumps, increases in interest rates, pressure on disposable income and low consumer confidence.

“[Last year] turned out to be another extremely difficult year for the South African automotive industry with domestic new-vehicle sales progressively under pressure, particularly at dealer level, despite attractive sales incentives and a strong contribution by the car rental sector, which accounted for an estimated 16.3% of new car sales during the year,” noted Naamsa.

The association said a preliminary estimate of 2016 motor-industry new-vehicle-related sales turnover indicated a decline of about 2% compared with 2015 – taking into account factors such as sales volumes and an estimated increase of about 14% in new-vehicle prices – to reach about R233-billion for the year.

New-vehicle export sales are estimated to have added a further R105-billion to total industry revenue in 2016.

The good news amid the gloom surrounding the domestic market is that new-vehicle exports from South Africa last year set an all-time record. Total vehicle exports reached 344 822 units, up from the 333 847 vehicles exported in 2015.

Outlook for 2017
Naamsa believed a further improvement in the global economy  – despite the “volatile and uncertain conditions” that were likely to prevail during 2017 – could lead to a 30 000-unit growth in new-vehicle exports from South Africa this year.

The domestic market is unlikely to see the same growth.

Naamsa said 2017 was expected to “be another difficult year” for the domestic auto industry, with only a modest improvement anticipated in new-vehicle sales, nudged along by a slightly improving South African economy.

“However, elevated political tensions are likely to continue to weigh on business confidence and the expected increase in taxes in this year’s budget will erode real purchasing power.”

Naamsa said new-vehicle sales could reach around 561 000 units in 2017 – a 2.5% improvement over 2016 – with growth forecast in all vehicle segments.

Taking into account the expected improvement in exports, Naamsa anticipated the production of vehicles in South Africa to increase by 6%, from 604 000 vehicles in 2016, to around 641 000 vehicles in 2017.