The global economic meltdown that started in 2008 took a heavy toll on new vehicle sales in South Africa last year – which slumped to 25.9 per cent below the 2008 level according to the National Association of Automobile Manufacturers of South Africa (Naamsa) and Associated Motor Holding’s annual sales results.
McCarthy Limited CEO Brand Pretorius believes it to be the biggest year-on-year decline in history, with the previous low point being a 24.8 per cent drop in sales between 1984 and 1985. Apart from the financial recession, Pretorius pointed out other reasons for the decline, such as low levels of business and consumer confidence, the ratio of household debt to disposable income being close to a record high at 78.2 per cent and tight lending criteria at financial institutions.
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 totalled 395 230 in 2009, compared to 533 387 a year previously – far below the record 714 316 units sold in 2006. Passenger car sales were down 21,6 per cent, on the 2008 figure while 30, per cent less light commercial vehicles were retailed and medium and heavy commercial vehicle sales tumbled by 40,4 per cent and 48 per cent respectively.
Pretorius further stated that sales to rental companies underpinned passenger vehicle sales in 2009, accounting for 15.2 per cent of volume, compared to 9.4 per cent five years previously. Dealers were the big losers with a 28.5 per cent drop in retail sales.
Despite the challenges faced in 2009, Pretorius forecasts total vehicle sales will grow by 7 per cent to 422 800 units this year. Pretorius said he anticipated that sales of passenger cars will to rise 8 per cent 278 800 units, with light commercials up 4.9 per cent to 124 000 units, medium commercials growing 4 per cent to 7 500 units and heavy commercials increasing by 6.7 per cent to 12 500 units.
According to Pretorius, factors that should influence sales positively this year include included enhanced vehicle affordability through price stability, higher trade in prices due to a strong used vehicle market and added value from manufacturers and dealers.
Other positive factors include a projected GDP growth rate of at least 1.5 per cent, an anticipated higher credit application approval rate and the positive impact of the Soccer World Cup on both consumer and business confidence.
However, Pretorius cautioned that there were several negative influences that could affect vehicle sales this year. One of these was the fact that 2.25 million new cars were sold between 2003 and 2008, meaning that 40 per cent of the car population is still relatively new.
Other factors were the improving, but still fragile business and consumer confidence, the impact of the financial crisis that continues to haunt the economy and a slowdown in infrastructural investment.
“We are not expecting any fireworks, but rather a period of consolidation and modest growth in sales of both new and used vehicles,” Pretorius concluded.
Volkswagen of South African leads the passenger market in 2009 with total sales of 49 902 units, thereby securing 19.3 per cent of the total passenger market,” said Mike Glendinning, VW of SA Director of Sales and Marketing.
“The weaker market performance during the month of December is a regular seasonal occurrence as customers delay purchases of new cars into the new year.
Importantly, despite lower sales during December, the underlying trend in new car sales continued reflecting slow growth through the month which, given the expected carryover of sales into January, should continue into the new year,” Glendinning said.
“The recently introduced Ford Everest continued to sell well, while Fiesta was the third best selling passenger car in December,” said Jacques Brent, vice president of sales and marketing, Ford Motor Company of Southern Africa.
“We are naturally hoping for a turnaround in the market and some renewed impetus for sales during 2010, both from an industry perspective as well as our own Ford business. However, we will only really be able to see some reliable trends and sales results from the end of March once the December-January period and the shorter February sales month draws to a close,” said Brent.
Suzuki Auto South Africa ended the year with a flourish by recording its best-ever monthly sales performance in SA to date, with a total of 557 units – not only the highest since the company officially commenced retail operations 19 months ago, but also a new market share record of 3.46 per cent.
“We are delighted with the performance of the Suzuki brand in the passenger car market, especially against the backdrop of the overall contraction in vehicle sales, and the particularly difficult trading conditions during December,” said Kazuyuki Yamashita, managing director of Suzuki Auto SA.
“While the current demand for new cars remains soft, there are encouraging signs that the recessionary impact is weakening. As a result, we are confident that the new vehicle market will start showing more definite signs of recovery from the third quarter this year,” Yamashita commented.