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Commenting on the new vehicle sales statistics for the month of July, 2016 – released today for public consumption on the website of the Department of Trade & Industry – the Association said that new vehicle sales had slumped dramatically during the month with all segments registering declines compared to the corresponding month last year.

July 2016 aggregate new vehicle sales at 44 883 units had registered a substantial decline of 9 222 vehicles or a fall of -17.0% compared to the 54 105 vehicles sold in July last year. Aggregate industry export sales at 29 042 for July, 2016 reflected a marginal improvement of 684 vehicles or an increase of 2.4% compared to the 28 358 vehicles exported in July last year.

Overall, out of the total reported Industry sales of 44 883 vehicles, an estimated 36 947 units or 82.3% represented dealer sales, 13.1% represented sales to the vehicle rental industry, 3.0% represented industry corporate fleet sales and 1.6% sales to government.

The new car market had experienced severe pressure during July, 2016 and at 29 007 units reflected a decline of 7 520 cars or a fall of 20.6% compared to the 36 527 new cars sold in July last year. This was again despite a strong contribution by the car rental industry which had accounted for 18.5% of new cars sold during the month. Margins at auto industry retail/dealer level also remained under pressure.

Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 13 575 units during July, 2016 reflected a decline of 1 490 units or a fall of 9.9% compared to the 15 065 light commercial vehicles sold during the corresponding month last year.

Sales of vehicles in the medium and heavy truck segments of the Industry at 722 units and 1 579 units, respectively, had also registered falls and, in the case of medium commercial vehicles, had registered a decline of 117 units or 13.9% and, in the case of heavy trucks and buses, a modest decline of 95 vehicles or a fall of -5.7% compared to the corresponding month last year.

Industry new vehicle exports during July, 2016 had registered a slight improvement of 684 vehicles or an increase of 2.4% from the 28 358 vehicles exported in July last year to 29 042 vehicle exports. The momentum of new vehicle exports was anticipated to improve during the balance of 2016 as a result of an expected increase in light commercial vehicle exports to Europe.

Domestically, based on the industry’s general outlook and prevailing macro-economic conditions, the balance of 2016 was likely to continue to be characterised by low economic growth and increased pressure on consumers’ disposable income. Double digit new vehicle price increases in response to earlier Rand weakness, relatively high interest rates and fragile consumer and business confidence at a time of rising retrenchments across a number of sectors – would put further downward pressure on sales of new motor vehicles.

The lower levels of new vehicle sales represented a reflection of current difficult economic conditions in South Africa. The decline in the Reserve Bank’s leading business cycle indicator to 90.8 in May from 90.9 in April took the index to its lowest level since the 2008 global financial crisis. The decline reinforced the recent decision by global financial institutions and the Reserve Bank to revise downwards South Africa’s growth outlook for 2016 and 2017. The decline in the latest Purchasing Managers Index also did not augur well for short to medium terms prospects. One positive feature was the imminent significant reduction in the price of fuel.

In contrast, export sales were expected to show modest upward momentum over the balance of the year. New vehicle industry production should therefore hold steady with 2016 export sales numbers expected to expand to around 351 000 units from the 333 802 export sales in 2015.


Monday, 1rd August 2016

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