Vehicle sales continue a downward trend

SALES of new vehicles in South Africa continued to disappoint into May 2019, says the National

Association of Automobile Manufacturers of South Africa (Naamsa) in a press release on Monday.

According to the press release aggregate domestic sales at 40506 units showed a decline of 2444 units or 5,7% from the 42950 vehicles sold in May last year. Export sales, which are down for the first rime this year, had registered a decline of 2866 vehicles or a fall of 8,8% compared to the 32829 vehicles exported in May last year.

Overall, out of the total reported industry sales of 40506 vehicles, an estimated 35506 units or 87,7% re-presented dealer sales, an estimated 5,8% represented sales to the vehicle rental industry, 3,6% to industry corporate fleets and 2,9% to government.

The May 2019 new passenger car market had registered a decline of 378 cars or a fall of 1,4% to 26170 units compared to the 26548 new cars sold in May last year. The car rental industry’s contribution accounted for 7,9% of new car sales in May 2019.

Domestic sales of new light commercial vehicles, bakkies and mini buses at 12197 units during May 2019 had recorded a decline of 1816 units or a fall of 13,0% from the 14013 light commercial vehicles sold during the corresponding month last year.

Sales in the medium and heavy truck segments of the industry had a mixed performance and at 681 units and 1458 units, respectively, reflected a marginal increase of 2 vehicles or an improvement of 0,3%, in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, a decline of 252 vehicles or a fall of 14,7% compared to the corresponding month last year.

The May 2019 export sales number represented an unexpected decline with export sales at 29850 vehicles reflecting a decrease of 8,8% compared to the 32716 vehicles exported in the same month last year. The momentum of vehicle exports over the course of 2019 should, however, increase further with vehicle exports for the first five months of the year still 20,1% higher than the corresponding period last year.

Demand for new vehicles is likely to remain under pressure in the coming months as the market continues to be affected by numerous constraining factors.

The ABSA Purchasing Manager’s Index decreased from 47,2 points in April 2019 to 45,4 points in May 2019 which does not bode well for a recovery in activity in the National Association of Automobile Manufacturers of South Africa (Naamsa), “the most credible and respected thought leader and partner for and on behalf of the automotive companies in South Africa” manufacturing sector.

Subdued economic circumstances in coming months, low consumer and business confidence levels, household disposable income which remains under pressure and global economic growth forecasts which continues to signal moderation pose worrying trends for the broader ma-nufacturing sector.

However, in anticipation of an improved economic growth rate for the year compared to 2018, albeit modest, a better second half performance in terms of new vehicle sales is still expected while the upward momentum on the export side remains strong and industry vehicle production le-vels would continue to benefit from strong vehicle export sales.