June 2010 has generally been a strong month for new car sales, but our modest rate of recovery from last year’s economic depression and the distraction, albeit a welcome one, of the Soccer World Cup has slowed some sectors.
The Naamsa report for June 2010 has stated that new car sales have generally exceeded industry expectations, which had anticipated some moderation of growth in certain sectors for this time of year. The aggregate industry sales stood at 39 931 units, an improvement of 6 849 units (or 20,7 percent) compared to the corresponding month last year. Furthermore, at the halfway mark of the calendar year aggregate industry sales have remained 23,9 percent ahead of the corresponding period last year.
The breakdown of the 33 946 industry sales actually reported to Naamsa is 89,5 percent (30 369 units) dealer/retail sales, 4,0 percent car rental sales, 3,6 percent was represented by industry corporate fleet sales and 2,9 percent comprised sales to government.
Industry new car sales remained robust for the month of June, as evidenced in a total sales figure of 26 810 units – an improvement of 5 501 units or 25,8 percent – compared to June 2009.
The traditionally strong light commercial vehicles/buses/bakkie segment still saw an improvement in new vehicle sales compared to last year, logging 11 222 units (975 units or 9,5 percent up) but the upwards swing in this sector’s sales appears to have slowed somewhat. Moreover, the segment had registered a slight decline compared to May 2010.
The CEO of McCarthy, Brand Pretorius, has noted this slight decline and made some astute observations as to their origins.
“There is no doubt that World Cup fever, which lead to some disruption in normal business activities, is having an effect on new vehicle sales…This was in line with our expectations. Our showroom traffic declined significantly from mid-June as customers devoted their time and attention to this once-in-a-lifetime event, but fortunately we were sustained by ongoing purchases by fleet owners and smaller businesses. A number of aggressive sales campaigns by vehicle manufacturers and distributors also helped stimulate some demand.”
Pretorius added that sales to the rental sector will probably remain somewhat depressed after the Soccer World Cup with post-event de-fleeting set to provide much-needed quality stock for the used car market.
“Prospects for a meaningful increase in sales during July are reasonable,” said Pretorius. “Although the final stages of the World Cup will still absorb some time and attention, July will herald the start of a new financial year for many companies which should impact sales positively. Furthermore, consumer confidence is rising slowly, which should increase the propensity to buy”, concluded Pretorius.
Export sales of South African-manufactured vehicles, however, have shown a strong increase over last year’s recession-affected figure of 11 768. June 2010 has registered an improvement of 73,6 percent (or 8 666 units) to 20 434 units. When taking the first six months of 2009 into account, this first half of 2010 has seen a 32,7 percent increase on overall Export-related sales (106 776 units) compared to last year’s figure of 80 456 units. Naamsa cites such factors as the 5,5 percent decrease in interest rates since the end of 2008, stability in new vehicle pricing and improvements in loan finance approval rates as contributing to the recovery of local new vehicle sales.
There are, however, other medium term factors – uncertainty about the sustainability of the global economic recovery coupled with increased volatility in financial markets, the Purchasing Managers Index and subdued private sector credit extension – which suggest that domestic economic recovery still remains patchy and fragile.
While the first six months of 2010 had been characterised by relatively strong sales domestically, and the rate of growth in the new vehicle sales cycle was anticipated to moderate, aggregate domestic sales for 2010 were projected to expand by about 15% for the year, whilst export sales were projected to grow by up to 30% – provided the global economy continued in a modest recovery phase and managed to avoid a double-dip recession.
To download the June 2010 Naamsa figures, click on the DOCUMENTS tab to the top, right of the above image and download the Naamsa pdf.