Statistics released by the Department of Trade and Industry showed that February new-vehicle sales dropped by 3.1% to 51 814 units, compared with the same month last year.

Passenger car sales declined 5.4% to 34 414 units, while the sale of light commercial vehicles, at 14 879 units, ticked up 0.9%.

Medium truck sales dipped by 2.2% to 910 units.

Heavy truck and bus sales gained 14.7% to 1 611 units, compared with the corresponding month last year.

February export sales followed the downward trend in domestic passenger car sales, dropping by 19.4% to 21 819 units.

The National Association of Automobile Manufacturers of South Africa (Naamsa) notes in a statement that this decline can attributed to the absence of any export contribution by Mercedes-Benz South Africa, as the company prepares for the production and export of the new C-Class model later this year.

The softening in the local market follows four successive years of growth, says Naamsa.

“Prospects for 2014 will be affected by subdued economic growth, above-average new-vehicle price increases as a result of exchange rate weakness and upward pressure on interest rates.

“Unsurprisingly, consumer confidence is under pressure with high levels of indebtedness, as well as sharp increases in energy and transport costs, particularly in Gauteng, owing to e-tolling.

“As a result, domestic trading conditions were anticipated to remain challenging with pressure on margins in all major sectors.”

Naamsa expects a flat domestic market in 2014, with modest declines possible in some segments.

“In contrast, vehicle exports should benefit from improving global economic conditions and, barring domestic supply disruptions, could well show growth during the second half of 2014, particularly in respect of vehicle exports to Asia, Africa and Europe.”

Standard Bank vehicle and asset finance head Sydney Soundy says it is becoming increasingly expensive to run a vehicle in South Africa.

The 2014 Budget Speech indicated that the general fuel levy and Road Accident Fund levy will increase by 12c and 8c a litre respectively on April 2. This will result in an additional 20c a litre in fuel costs.

These costs add to a string of recent fuel price jumps, the latest of which were 36c and 28c increases on petrol and diesel respectively, on March 5, which resulted in price increases of 84% in petrol and 94% in diesel since January 2010.

Filling up a vehicle with a tank capacity of 50 ℓ has increased by roughly R320 since January 2010.

Soundy says the recently implemented toll fees in Gauteng add to the cost of running vehicles for drivers in this province, while consumers also have to absorb increases in vehicle finance instalments following the 0.5% hike in the interest rate at the end of January.

“The general advice for consumers, to be cautious and responsible when taking up lending facilities, remains increasingly relevant today, as it has been in the past,” says Soundy.

“Consumers are advised to take up lending facilities that suit their pockets and for which their repayments/instalments still leave room, or a cushion, for unforeseen cost increases. Lengthening of finance terms and building of higher residual values into vehicle finance contracts, aimed at reducing instalments, need to be approached by consumers with utmost caution – the structuring of deals in this way may resolve affordability in the short term, but do not necessarily alleviate long-term debt commitments that may be impacted on by changing economic conditions.”

Standard Bank data shows that the average vehicle contract term on the lender’s books continues to rise, from 65.6 months in January last year to 66.9 months in January 2014.