The South African motor industry experienced an extremely disappointing new vehicle sales month in August 2008. According to the latest results released by the National Association of Automobile Manufacturers of South Africa (Naamsa) and Associated Motor Holdings (AMH), total vehicles sales dropped.
According to Brand Pretorius, chairman of McCarthy Motor Holdings, one can only hope that last month’s results represent the lowest point in the current declining sales cycle.
Passenger vehicle sales declined by 32.7% when compared to August 2007’s results, recording 28 424 sales. Sales in the Light Commercial Vehicle segment declined by 29.2% to 12 878 units. The Medium Commercial Vehicle segment experienced a decline of 30.2%, selling 969 units during August. The only positive performance came from the Heavy Commercial Vehicle segment, where 2 038 sales were recorded – a 4% increase on August 2007’s results.
“The drop of more than 30% in total vehicle sales indicates that an increasing number of both fleet and private buyers are now postponing the decision to replace their vehicles,” said Pretorius. “We believe that their propensity to buy is being undermined by a continuing lack of business and consumer confidence that is currently prevailing in the country.”
Pretorius said that in the case of the private customers, the strict lending criteria, following the introduction of the NCA last year, are difinitely inhibiting the market. “Due to high levels of bad debt, resulting in a substantial number of vehicles being repossessed, vehicle finance houses are also adopting a more conservative stance when providing credit to customers.
In many cases depressed trade-in prices are preventing deals from being done, as the value of the prospective buyer’s trade-in tends to be less than the outstanding balance owed to the bank.”
He said that, these low levels of sales will unfortunately lead to further dealer network rationalisation and consequently, job losses.
Looking at medium term prospects for the new vehicle market, Pretorius said that there is hope that the sales trend will flatten out.
“Sentiment has been impacted positively by stability in the interest rate and the reduction in the fuel price,” said Pretorius. “A further acceleration in fixed investment and excitement about the positive impact of World Cup Soccer 2010, should also stimulate the market over the next year.”
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