Sharp decline in new vehicle sales

The National Association of Automobile Manufacturers of South Africa (NAAMSA) said the drop in sales was particularly noticeable in the car market.

Out of the total NAAMSA reported industry sales, 85,4% represented dealer/retail sales, 7,4% sales to the car rental industry, 4,2% sales to government and 3% of sales represented single units and sales into auto company fleets.

November new passenger car sales totalled 29,335 units compared to the 34,796 new cars sold during November 2006. Taking account of new car sales not reported in detail to NAAMSA, the November 2007 total new car market recorded a decline of 16,5% compared to 2006.

On a year to date basis new car sales were 9,2% below the corresponding January to November sales of last year.

Sales of new light commercial vehicles, bakkies and minibuses at 14,973 units during this November had also weakened significantly and reflected a decline of 2,412 units or 13,9% compared to the corresponding month last year.

New vehicle exports during November 2007 at 16,940 units had held up well and reflected a marginal decline of 274 units or 1,6% compared to the 17,214 vehicles exported during the previous month. Total aggregate vehicle exports for 2007 should reach 170,000 units rising to a projected 255,000 vehicles in 2008.

NAAMSA said the decline in sales was the result the cumulative impact of interest rate increases, record high levels of household debt, pressure on disposable incomes due to rising inflation, as well as deteriorating business and consumer sentiment.

The automotive industry is gearing itself for a weak market for at least the first half of next year and if the upward trend in interest rates continues, it will put substantial pressure on new vehicle sales throughout 2008.