McCarthy Motor Holdings chairman Brand Pretorius expects SA’s total vehicle sales to decline by 9,4 per cent in 2009 and has urged the industry to restructure, re-invent and refocus its business models to survive another challenging year.
Passenger vehicle sales are expected to decline by 8,9 per cent to 300 000 units and Light Commercial Vehicle (LCV) sales by 9,4 per cent to an estimated total of 153 500 units, the McCarthy chairman said on Friday.
He believes that vehicle price increases of about eight to ten per cent due to Rand depreciation, ongoing low levels of business and consumer confidence, large-scale retrenchments and a GDP growth of less than 1 per cent are among the negative factors that stand in the way of the motor industry remaining viable.
“One of the key challenges faced by the local motor industry for 2009 is planning for the future in an increasingly volatile international and local environment. Furthermore we are confronted by the dire need to protect export volumes, enhance new vehicle affordability, ensuring acceptable levels of production capacity utilisation and containing job losses,” Pretorius was quoted as saying.
However, substantial reductions in fuel prices in 2009 will have a stimulatory effect on new vehicle sales. In the run up to the 2010 Soccer World Cup, “interest rates should drop to approximately 12,5 per cent and inflation to 7 per cent during 2009, while government expenditure on infrastructure is set to accelerate.”
“Furthermore, a buyer’s market is likely to prevail in the motor industry as manufacturers, importers and dealers will compete aggressively for market share. Bearing all this in mind, 2009 might impart on us the most competitive market ever, characterised by the widest range of vehicles available and intense, price based competition,” Pretorius concluded.
Mike Glendinning, VWSA’s sales and marketing director, echoed Pretorius’ sentiments, and said: “Going forward, despite the good news for consumers of late 2008 and early 2009, as the inflation cycle peaked, interest rates were reduced in December and the price of petrol came down sharply in January – 2009 promises to be another tough year for the new passenger car market.”
Although inflation is set to continue declining in 2009, likely followed by a similar trend in the rate of interest, South African households remain indebted with financial stress and debt consolidation likely to continue for some time.
“Given the current outlook for the global and local economy, the second half of 2009 could well see the beginning of some improvement. Despite these expectations, however, it is probable that demand for new passenger cars will decline further during 2009 before some recovery late in the year and into 2010,” he concluded.
Click here to download a summary of the latest new vehicle sales statistics as supplied by Naamsa.