Fresh car sales: SA s vehicle market after Junk Status, Wheels24
Fresh car sales: SA’s vehicle market after ‘Junk Status’
Cape Town – Fresh vehicle sales in all segments, with the exception of medium commercial vehicles, deteriorated sharply during April 2017, registering dual digit declines, reports National Association of Automobile Manufacturers of South Africa (Naamsa).
Wheels24 columnist Alexander Parker shares his insights:
Parker said: “Fresh vehicle sales figures took a dive in April as punters stayed away from showrooms. A positive reading of a 13.7% dive in fresh cars sales might be that both Easter and the Mayday long weekends fell in the month, and that people don`t buy cars when they are on holiday.
“The truth is that we won`t indeed know for a month or two fairly how badly news of South Africa`s credit downgrade and attendant economic malaise has hit consumer confidence. As much as people don`t buy cars when they`re on leave, identically neither do people take on debt if they are worried about the security of the their jobs and the potential for interest rate rises and tax rises required to fund the spiralling cost of government debt.
“Absa`s seasonally adjusted Purchasing Managers Index (PMI) plummeted to 37, plumbing insides not seen since two thousand nine and the worst of the global crash and our own problems with loadshedding. This is the very first total survey since the cabinet reshuffle that led to SA`s credit downgrade and while stringently speaking a measure of business confidence not consumer confidence, it does indicate that people are very, very worried indeed about the state of the South African economy.
“Because of the surfeit of public holidays last month it is hard to assign blame for a slump in car sales to the cabinet reshuffle and consumer confidence. But time will tell, and it doesn`t look too good.
“There are measures that the government could take to bolster the sector, but all of them would come at a cost to the fiscus, so it is unlikely that it will happen. The government could consider further tax cracks on locally manufactured vehicles.
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“It could put its money where its environmentalist mouth is and incentivise the sale of cars with low carbon emissions, electrical cars and hybrids. The value of individual mobility in a moribund economy is well established, but with government debt now at a gobsmacking R2.2-trillion and the cost of servicing it rocketing as a result of the finance ministry/treasury controversy, every cent will matter.
“None of this bodes well for the car industry in SA, and my greatest concern is for the more marginal brands. I`m not sure they will all sustain this, and my fear is that some will go after where Daihatsu and Citroen have already gone – the exit.”
Naamsa two thousand seventeen April sales: information by Wesbank
WesBank says: «This sales spectacle is not just bad news for the fresh vehicle industry, but also the country. Historically, the spectacle of the fresh vehicle market has served as a leading indicator for economic activity, suggesting that the outlook for year could be worse than originally forecast. One should also factor in that the April decline was compounded by several public holidays.»
WesBank`s internal data also has further insight into this unexpected market reaction. Consumer request for fresh and used vehicle finance, as measured through the volume of finance applications received, fell sharply over the last month.
Fresh vehicle finance applications declined Ten.7%, while used vehicle finance applications fell 15.3%. Even however April only had eighteen working days there was still a significant decline in market activity, with a 6.4% slump in the daily rate of applications received.
