The global financial meltdown that began in 2008 and its far reaching economic consequences took a heavy toll on vehicle sales in South Africa last year. Total sales slumped 25.9% below the 2008 level, with light commercial vehicles and trucks showing far bigger declines than was the case for passenger cars.
Commenting on the annual sales results released by the National Association of Automobile Manufacturers of SA (Naamsa) and Associated Motor Holdings (AMH) this week, the CEO of McCarthy Limited, Brand Pretorius, said this was the biggest year-on-year decline in history, with the previous low point having been a 24,8% fall in sales between 1984 and 1985.
He said there were a number of reasons for the decline over and above the main reason, namely the South African economy going into a recession for the first time in 17 years.
Addressing a media briefing at the OR Tambo International Airport, Pretorius said major contributors to this situation were low levels of business and consumer confidence, the ratio of household debt to disposable income being close to a record high at 78.2% and tight lending criteria at financial institutions.
The prevailing recessionary conditions have resulted in employment levels showing the steepest decline in 50 years, with an estimated one million jobs lost, gross fixed capital formation shrinking, company liquidations up 27% from January to November and credit demand from households falling for the first time in 43 years last October.
Pretorius added that the local motor industry was affected by a number of other factors too. These included a deterioration in vehicle affordability, a substantial drop in the credit approval ratio, an ever-lengthening replacement cycle of new cars from 29 months in 2006 to 41 months at present, and fleet-owners postponing vehicle replacements.
Total vehicle sales, including those by AMH, which does not give a detailed sales breakdown to Naamsa, totalled 395 230 in 2009, compared to 533 387 a year previously, which was, in turn, way below the high point of the record 714 316 units sold in 2006.
Passenger car sales were down 21.6%, on the 2008 figure while 30.3% less light commercial vehicles were retailed and medium and heavy commercial vehicle sales tumbled by 40.4% and 48.0% respectively. Interestingly the latter category had held up best when the economic downturn first hit the industry in 2008.
The CEO of Bidvest-owned McCarthy Limited said that sales to rental companies underpinned passenger vehicle sales in 2009, accounting for 15.2% of volume, compared to 9.4% five years previously. Dealers were the big losers with a 28.5% drop in retail sales.
The market share of small cars showed a modest decline compared to 2008, but it still remained the largest segment. The large, sports and exotic categories remain the same, while the medium segment gained share. Recreational vehicles showed further growth and this category now accounts for 20% of the total car market.
The overall commercial vehicle market tumbled by a massive 32.8% from the 2008 figure, which in turn had been 15.4% down on the record sales of almost 250 000 units in 2007 and equated to a decline in volume of almost 50% in two years.
*Picture from www.iodsa.co.za
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