New vehicle sales woes continue

Out of the total NAAMSA reported industry sales of 46,248 vehicles, 87.3% represented dealer/retail sales, 5.0% sales to the car rental industry, 3.3% sales to government and 4.4% sales into NAAMSA member company fleets.

February new car sales of 27,505 units reflected a decline of 4,767 units or 14.8% compared to the 32,272 new cars sold during February 2007. NAAMSA says sales continued to be affected by rising inflationary pressures, the effect of cumulative interest rate rises and high personal debt levels.

Sales of new light commercial vehicles, bakkies and minibuses at 15,514 units during February, 2008 reflected a decline of 1,863 units or 10.7% compared to the 17,377 unit sales of the corresponding month last year. A large portion of this segment is also bought by private individuals subjected to the same economic factors affecting the passenger car market.

Supported by strong investment sentiment and infrastructural spending, sales of vehicles in the medium and heavy truck segments of the industry had maintained their strong upward momentum and the February, 2008 sales at 1,262 units and 1,967 units, respectively, have recorded an improvement of 27 units or 2.2%, in the case of medium commercials, and 325 units or 19.8%, in the case of heavy trucks and buses – compared to the corresponding month last year.

February 2008 new vehicle export sales at 20,631 units (the best performing export month on record) had shown a significant improvement of 3,895 vehicles or 23.3% up from the 16,736 vehicles exported during the corresponding month last year.

NAAMSA said the anticipated record growth in exports for 2008 would benefit the South African vehicle and component industry's production volumes, the country's trade balance and enhance the automotive sector's overall contribution to the country's gross domestic product.

The reduction in the corporate tax rate to 28%, the emphasis on supply side measures to boost the productive capacity of the South African economy, the proposed adjustment to personal income tax and car travel allowances to compensate for inflation, and the additional infrastructure investment allocations in the recently announced budget was expected to support savings, investment and future economic growth and would therefore positively influence new vehicle sales over the medium to long term. In the short term, however, new car and light commercial vehicle sales were likely to remain under pressure as a result of high interest rates, a slowdown in economic activity and new vehicle price inflation.

Download the NAAMSA sales report here.