New vehicle sales slumped 43% in April
AMH Group|Ford|Nedbank|South Africa|Aggregate New Car Sales|Car Rental Industry|Car Sales|Dealer/retail Sales|Jacques Brent|Naamsa
© Reuse this
The National Association of Automobile Manufacturers of South Africa (Naamsa) on Tuesday reported that sales in all segments of the South African new vehicle market, as well as export sales, had continued to register sharp declines, compared with the corresponding month last year.
In aggregate terms, April recorded a year-on-year decline of 43,7% in new vehicle sales, which was the worst on record.
In addition to a slowing economy and depressed consumer spending, the main factor contributing to the massive decline was April’s large number of public holidays, Naamsa reported.
The organisation reported new vehicle sales for April at around 24 063 units, which reflected a massive decline of 18 262 units, or 43,1% compared with the 42 325 units sold during the April 2008. Factoring in aggregate vehicle sales reported by the AMH Group, the year-on-year decline amounted to 43,7%.
Overall, of the total Naamsa reported industry sales of 24 063 vehicles, 83,1% or 20 001 units represented dealer/retail sales, 4,4% sales to government, 7,5% represented sales to the car rental industry, and 5% into industry’s corporate fleets.
New car sales for April were recorded at 15 071 units, which reflected a decline of 9 033 units or 37,5% compared with the 24 104 new cars sold during April 2008. Factoring in aggregate new car sales reported by the AMH Group, the year-on-year decline had amounted to 10 615 units or a fall of 38,8%.
This constituted the largest year-on-year monthly decline in new car sales over the past 24 years.
Naamsa reported that sales of new light commercial vehicles (LCV), bakkies, and minibuses were recorded at around 7 481 units during this period, reflecting a substantial decline of 7 364 units or 49,6% compared with the 14 845 units of the corresponding month last year. Taking account of the LCV sales reported by the AMH Group, the year-on-year decline amounted to 7 880 units or 49,5%.
Sales of vehicles in the medium and heavy truck segments of the industry had registered substantial falls during April, with sales at 691 units and 820 units respectively, which was a massive decline of 586 units or 45,9%, in the case of medium commercials, and 1 279 units or 60,9%, in the case of heavy trucks and buses. This was compared with the corresponding month last year.
Naamsa reported that the continuing weakness in medium and heavy commercial vehicle (HCV) sales confirmed a downturn in investment spending by the private sector and reflected that business confidence was under pressure. The lower sales in the sector also reflected continuing difficulty experienced by truck operating businesses in obtaining finance.
With one-third of calendar 2009 accounted for, aggregate industry new vehicle sales recorded at 128 164 units, reflected a decline of 36,4% compared with the 201 473 vehicles sold during the corresponding four months last year.
Automotive producer Ford on Tuesday stated that dealer sales for April had fallen to 20 000 units for the month, which was akin to levels last seen in December 2002.
Speaking at a function hosted by Naamsa, Ford sales and marketing vice president, Jacques Brent stated that only 12 000 passenger and 6 500 LCV had been sold during the month.
Year-on-year, Ford sales have declined by 35,5% in January, with February recording a 36% decline, March a 30% decline, and April a 29% decline in vehicle sales.
HCV were under a lot of pressure and April sales were down 60,7%, which Brent said was caused mostly by the number of holidays during the month, but also because of the downscaling in commercial operations.
Naamsa stated that the decline in exports of South African-produced motor vehicles had accelerated during April 2009, and at 11 479 vehicles had registered a decline of 11 057 vehicles or 49,1% compared with the 22 536 vehicles exported during April 2008.
The slowdown in South Africa’s major export markets was expected to translate into further declines in the number of vehicles exported by the industry during calendar 2009.
All sectors in the South African automotive value chain continued to experience extremely difficult operating conditions with an increasing number of businesses, particularly in the auto parts manufacturing and retail sectors, fighting for survival, Naamsa said.
The most recent 1% reduction in interest rates and the resultant lower debt servicing costs would bring some relief to hard-pressed consumers and businesses, while domestic sales of new vehicles were expected to remain under pressure in the short-to mediu- term.
However, a revival in consumer expenditure on the back of lower interest rates, together with stimulatory government spending, should start to lend support to the domestic market during the second half of the year.
“Any improvement in industry new vehicle exports would only materialise once the severe current global financial and economic crisis abated and confidence returned to international markets. More recently, positive signs had emerged in the form of a return of some confidence in international financial markets,” Naamsa said.
Financial services provider Nedbank stated that vehicle sales were expected to remain weak in the months ahead, as economic conditions continued to deteriorate both locally and globally.
Domestically, rising unemployment, weak income growth as well as high household debt should continue to weigh heavily on consumer confidence and purchasing power.
“Some recovery in passenger vehicle sales is likely to be experienced during the second half of the year as previous interest rate cuts start to take effect, while commercial vehicle sales could remain weak in line with the slowdown in fixed investment activity and the overall economy. The export market will be volatile during the year and will be driven by the developments in major export destinations,” Nedbank reported in a statement.
Absa expected vehicle sales for the year to drop by between 24% and 25%, believing that the market would likely bottom out during the middle of the year, as well as regain some ground towards the end of the calendar period.
Edited by: Mariaan Webb
© Reuse this
Other Video News
South Africa's drive to create a competitive and food-secure State was boosted on Tuesday with the launch of the Centre of Excellence (CoE) in Food Security, at the University of the Western Cape, which would bring together a cohort of experts and researchers from 19...
The City of Cape Town has entered into eight third-party service provider agreements licensing the take up of the spare infrastructure capacity generated through the city’s broadband network. Lease-agreement negotiations were progressing with another 20 third-party...
A 344.5 t wax reactor has arrived at petrochemicals giant Sasol’s Fisher-Tropsch wax expansion project, in Sasolsburg, in the Free State, after five weeks of road travel from Richards Bay, in KwaZulu-Natal. The reactor was transported through Pongola, in...
Recent Research Reports
Steel 2014: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2014 report provides an overview of the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon steel and stainless...
Projects in Progress 2014 - First Edition (PDF Report)
This publication contains insight into progress at the delayed Medupi and Kusile coal-fired projects, in Mpumalanga and Limpopo respectively, as well as at the Ingula pumped-storage scheme, which is under construction on the border between the Free State and...
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
This Week's Magazine
There is enough water in South Africa to supply communities and the economy, even if some activities may be constrained, such as agriculture in the Limpopo, says National Planning Commission commissioner Mike Muller.
Muller was also the director-general from 1997...
South African antenna designer and producer Poynting and provider of professional products, system integration and implementation and commissioning services for the broadcast and telecommunications markets in South Africa, African Union Communications (Aucom),...
Industrial automation giant Festo has been displaying some of the its ongoing research projects and latest automation developments and products at the Hannover industrial fair from April 7 to 11, as part of its Integrated Automation – The Next Steps theme. The...
South African retail companies are responding to the way in which e-commerce is changing their engagement model with customers by improving customer engagement channels and order fulfilment intelligence, says industrial and retail software company JDA Europe, Middle...
In support of the South African government’s mandate to create more jobs and promote sustainable development, multilevel marketing company Amway’ business model aims to assist government in easing the startup of business and encourage an entrepreneurial mindset...