New vehicle sales still on the skids

Volkswagen of South Africa sales and marketing director Mike Glendinning said the automotive manufacturer captured leadership of the new passenger car market for the fourth consecutive month, with sales of 4,117 total units in February, which earned the Company a market share of 20.2%.

Within the VW brand, Polo/Classic recorded sales of 1,588 units, with Citi Golf showing consistency with sales of 1,136 units.

In the highly competitive premium segment, more than 700 units were sold under the Audi brand.

“The Volkswagen Commercial Vehicles Brand sold a total of 333 units, thereby growing share to 2.7% of the highly competitive Commercial Vehicle segment,” Glendinning adds.

Adding to the pressure on sales, is rapid growth in new vehicle prices which escalated by 9.4% in January and which are expected to grow even more rapidly in coming months.

Despite these economic challenges, Renault reports its continued progression, which started in December 2008, increasing its share of the passenger car market to 1.6% in February - compared to 1.4% in January 2009.

Renault Logan achieved an estimated 5.8% of the AB sedan segment while Koleos earned a 2.2% share of the Small SUV segment reaching the highest unit sales since its launch.

“While February's results are promising, we are particularly optimistic about our performance for March which is the month during which our locally manufactured, just launched Renault Sandero will retail,” says Régis Fricotte, Vice President of Marketing at Renault South Africa. “It is the right car delivered at the right price and at the right time to a cost and quality-conscious South African market. Sandero is perfectly positioned to spearhead our product offensive in 2009.”

GMSA recorded a market share of 10.8% in tough trading conditions, with passenger sales of 924 units, light commercials of 1,999 units and truck sales of 254 units; while the Opel Corsa Utility continues its run as the best selling sub-one tonner in the South African market with 975 units recorded.

“The new vehicle market in February 09 versus February 08 was 36.3% down mainly due to a 40% decrease in light commercial sales, a 36.4% drop in truck sales and a 34% decrease in passenger sales,” said Malcolm Gauld, VP of Sales and Marketing for GM South Africa.

“Considering the 33,500 unit decrease in the new vehicle market in the first two months of 2009 versus the same period in 2008, our market forecast of an already conservative 400,000 units for the 2009 calendar year looks to be on the high side.

"Recent inflation and growth figures have lead to speculation that interest rates could be cut by as much as 2% in an attempt to stimulate the economy. This should afford consumers some relief but with household debt at high levels, is unlikely to have any affect on new vehicle sales until very late in 2009, if at all,” continues Gauld. “Demand for light commercials and trucks has fallen substantially, indicative of the economic downturn and may force extraordinary measures by the authorities to stimulate the economy.”

Glendinning said, “Furthermore, households and businesses are addressing their debt positions, with growth in credit extension to the private sector down to 11.9% in January (the lowest level since November 2004) and with demand for mortgage finance falling to the lowest level since mid-year 2003.”

He added that the national budget announced last month would also play a supportive role for the economy during the remainder of 2009.

“Demand for new passenger cars is, however, set to remain under severe pressure in coming months and is likely to continue declining well into the second half of 2009,” Glendinning concluded.