June 2014 New Vehicle Sales

According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), the domestic sales market will continue to experience difficulty in the second half of the year, while exports are expected to pick up as a result of improved global economic conditions.

While the local economy continues to suffer from slower growth, high levels of industrial action and weakened exchange rate, new vehicle sales for the month of June registered a moderate decline of 2,3% (1 251 vehicles) – falling from the 54 088 vehicles sold for the same month last year to 52 837 units sold. The export industry’s decline was more marginal. At 0,8%, there were just 195 less vehicles exported compared with the corresponding month in 2013, when 24 219 vehicle were shipped out.

Ou of the total reported industry sales of 52 837 vehicles, 83,8% represented dealer sales, 8,3% represented sales to the rental ndustry, 4,4% went to corporate fleets and 3,5% went to government.

The new car market had remained under pressure during June, and at 35 355 units reflected a decline of 2 017 units or a fall of 5,4% compared to the 37 372 new cars sold in June last year. Sales of new light commercial vehicles, bakkies and mini buses at 14 556 units during June had shown some recovery and reflected an increase of 621 units or 4,5% compared to the 13 935 light commercial vehicles sold during the corresponding month last year.

Compared to the corresponding month last year, sales of vehicles in the medium and heavy truck segments of the Industry at 942 units and 1 984 units, respectively, reflected a mixed performance with medium commercial vehicle sales showing a decline of 109 units or 10,4%, whilst heavy trucks and buses had registered an improvement of 254 units or a strong gain of 14,7%.

According to the association, South Africa urgently needed stronger growth, faster employment creation and a narrowing of the current account and fiscal deficits. The restoration of and improvement in domestic and foreign investor confidence represented a necessary pre-condition in this regard.

The current strike in the steel and engineering industry was most unfortunate in that it would further undermine investment sentiment and, if prolonged, would increase the risk of the South African economy moving into recession. The impact on vehicle production and exports would start to be felt if the industrial action continued beyond two weeks.