New-vehicle sales continued their downward trend in May, declining by 3.2%, to 47 868 units, compared with the same month last year.
Sales numbers released by the Department of Trade and Industry show that new passenger car sales dropped by 5.4% in May, to 31 201 units.
The National Association of Automobile Manufacturers of South Africa notes in a statement that “intense competition in a difficult trading environment continued to pressurise the domestic new-car market”.
Sales of new light commercial vehicles, bakkies and minibuses, at 14 182 units, increased by 2.2%, while sales of medium trucks, at 787 units, dropped by 4%.
New heavy truck and bus sales shrunk by 4.7%, to 1 698 units.
The good news was that new- vehicle exports more than doubled in May.
The local automotive assembly industry moved 33 411 units to markets abroad – a 114.2% gain on May last year.
“Over the last few months, we have seen a rise in the overall cost of mobility,” comments WesBank head of research Rudolf Mahoney.
“Fuel prices have increased 18% since the start of the year as a result of a weaker rand, and the Reserve Bank has warned of interest rate hikes in the coming months. Factors such as these will continue to affect consumer confidence and put household budgets under even more pressure. For many consumers buying a new car may not be a priority in the immediate future.”
Also, new-vehicle price inflation is currently at 7.6% and continues to outpace consumer price inflation, which is at 4.5%, mainly as a result of the continued weakening of the rand, as well as low consumer and business confidence levels.
These factors have seen new- vehicle finance applications declining 7.1% year-on-year.
“The decline in May’s new-vehicle sales remains in line with our forecast,” notes Mahoney.
“We expect sales to bounce back in June, as manufacturer incentives drive end-of- quarter sales. The market should also see some recovery in the second half of the year, driven by replacement cycles at rental companies.
“This year, the market should see growth of just less than 1%.”