Combined Motor Holdings (CMH) CEO Jebb McIntosh expects new-car price increases of around 6% in 2015, compared with an average of 8% in 2014.
“In the case of some brands [in 2014], this was as high as 14% for fully imported cars.”
McIntosh expects a flat year in terms of new-car sales in South Africa. However, he expects growth of about 5% in the used- car market.
CMH has been expecting a recovery in the used-car market for the last 18 months, but the price competitiveness of especially new entry-level cars has been “pushing back” this revival.
However, with continued price increases in the new-car market, the used-car market should see a resurgence in 2015, says McIntosh. In fact, the uptick in the market is already visible.
Market ‘Prereported’
About one month’s new-vehicle stock in South Africa is currently “prereported”, says McIntosh.
This means a vehicle is shown as sold, “but is still on your showroom floor”.
It also means that current new-vehicle sales figures, compiled by vehicle importers and manufacturers and published through the Department of Trade and Industry (DTI), do not reflect actual current market conditions. Prereporting means sales fluctuations – greater than currently shown in the data – are evened out over time, says McIntosh.
National Association of Automobile Manufacturers of South Africa (Naamsa) director Nico Vermeulen says prereporting is where a dealer reports a sale in order to meet an incentive target.
“Let’s assume you need to sell 20 cars, but you have sold 19. In order to secure an attractive incentive from the manufacturer, the dealer may then be tempted to sell the vehicle to himself, and to resell it as a used vehicle.”
Manufacturers may also sell themselves ‘single units’ to ensure they meet targets.
“There is not a lot of logic in prereporting unless the incentive is very big,” says Vermeulen.
He adds that prereporting is not allowed, as it does not conform with the guidelines and standards set by the automotive industry in South Africa.
He believes that the data procured by the DTI and Naamsa on monthly new-vehicle sales in South Africa “has a high level of accuracy”.
When a sale is reported, the vehicle identification number is attached to that sale, which means no vehicle can be sold twice, explains Vermeulen.
“There are a lot of checks and balances in place in the system.”