January vehicle sales worst in eight years

Aggregate new vehicle sales for January 2009 were the worst recorded in the past eight years, the National Association of Automobile Manufacturers of South Africa (Naamsa) said on Tuesday.

At 30 503 units, new vehicle sales registered a massive decline of 16 712 units or 35,4% compared to the 47 215 units sold during the corresponding month last year.

Sales for January 2009 in all segments of the country’s new vehicle market, as well as export sales, registered sharp declines compared to the corresponding month last year.

According to Naamsa, it was clear that all sectors of the South African vehicle industry were experiencing an unprecedented and severe deterioration in operating conditions as the economy rapidly slowed.

Overall, out of the total Naamsa reported industry sales of 30 503 vehicles, 81% or 25 695 units represented dealer or retail sales, 9,5% sales to government, 4,8% represented sales to the car-rental industry and 4,7% into industry’s corporate fleets.

New car sales for January 2009 at 20 601 units reflected a decline of 9 838 units or 32,3% compared with the 30 439 new cars sold during January 2008, Naamsa said.

Factoring in new car sales not reported in detail, the year on year decline amounted to 11 769 units or a fall of 34,4%.

Sales of Naamsa new light commercial vehicles, bakkies and minibuses at 8 354 units during January reflected a decline of 5 837 units or 41,1% compared with the 14 191 units of the corresponding month last year.

Taking account of the light commercial vehicle sales reported by the AMH Group, the year-on-year decline amounted to 6 319 units or 41,3%, Naamsa said.

Export market hard hit
Sales of vehicles in the medium and heavy truck segments of the industry also started the year on an extremely weak note and January sales at 595 units and 953 units, respectively, recorded a massive decline of 510 units or 46,2%, in the case of medium commercials, and 527 units or 35,6%, in the case of heavy trucks and buses—compared with the corresponding month last year.

Naamsa said that exports of South African-produced motor vehicles during January at 10 713 vehicles had registered a decline of 835 units or 7,2% compared with the 11 548 vehicles exported during January last year.

“Looking at the international environment, the sharp slowdown in South Africa’s major export markets [Eurozone, Japan and the United States] would inevitably translate into significant declines in the number of vehicles exported by the industry during calendar 2009,” Naamsa said.

At this stage, manufacturers’ projections suggested that overall industry export sales could decline by as much as 35% from last year’s record level of 284 211 vehicles, the association added.

According to Naamsa, during 2009 market sentiment and vehicle industry trading conditions would continue to be tested by the high interest rate environment, record high levels of household debt, volatile exchange rates and unpredictable international financial markets.

Recent above-average new vehicle price increases, in response to past high input costs and the weak rand, would also serve to undermine affordability and demand.

“Any improvement in the domestic environment is dependent on a revival of consumer expenditure, aggressive interest rate reductions and fiscal stimulation,” Naamsa said.

At this stage, the industry remains hopeful that on the back of significantly lower levels of inflation expected in coming months and resultant lower rates of interest, together with stimulatory government spending, there will be some improvement in the second half of 2009.

However, any improvement in international trading conditions would only occur once the severe global economic and financial crisis dissipated, Naamsa added.

“Given the magnitude and seriousness of the global economic crisis, it is anticipated that any recovery would only eventuate in 2010 or 2011.”—Sapa

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