New vehicle sales during May 2016 registered further weakness with all segments registering declines over the corresponding month last year. In contrast, as had been the case over recent months, new vehicle exports reflected an improvement, albeit marginal. This is according to the National Association of Automobile Manufacturers of South Africa (NAAMSA) which was commenting on the May figures released on the website of the Department of Trade & Industry.
May 2016 aggregate new vehicle sales across all sector at 42 907 units had registered a decline of 4 925 vehicles – or a fall of 10.3% – compared to the 47 832 vehicles sold in May last year. On a year to date basis, new vehicle sales reflected a decline of 9.8% compared to the corresponding five months last year. May, 2016 export sales, at 33 676 units, reflected a gain of 262 vehicles or an improvement of 0.8% compared to the 33 414 vehicles exported in May last year.
The new car market had continued to experience pressure during May, 2016 and at 27 143 units, registered a decline of 4 018 cars or a fall of 12.9% compared to the 31 161 new cars sold in May last year.
Domestic sales of industry new light commercial vehicles, bakkies and mini buses – at 13 446 units – reflected a decline of 753 units or a fall of 5.3% compared to the 14 199 light commercial vehicles sold during the corresponding month last year.
Sales of vehicles in the medium and heavy truck segments of the industry – at 684 units and 1 634 unit respectively – had registered declines and, in the case of medium commercial vehicles, represented a fall of 103 units or 13.1%. In the case of heavy trucks and buses, a more modest decline of 51 vehicles or a fall of 3.0% compared to the corresponding month last year.
Industry new vehicle exports during May, 2016 had registered a modest improvement rising by 262 vehicles or 0.8% from 33 414 vehicles exported in May last year to 33 676 exports in May this year. NAAMSA commented that the momentum of new vehicle exports was expected to improve over the balance of 2016 on the back of additional light commercial vehicle exports to Europe.
The lower levels of demand domestically would contribute to lower vehicle imports and with further expected growth in vehicle exports – the industry should continue to contribute positively to South Africa’s current account of the balance of payments.
According to the Association, May 2016 domestic sales figures had been “uninspiring” and the balance of 2016 industry sales numbers were expected to remain under pressure as a result of subdued economic growth, double digit new vehicle price increases, the possibility of further interest rate hikes and ongoing challenges confronting consumers and businesses.
In particular, above inflation new vehicle price rises, estimated in the range of 10% to 15% plus for the year, would put further downward pressure on sales of new motor vehicles. While the Purchasing Manager’s Index, a leading economic indicator, had declined for the month of May, the Index had remained above the level of 50 which suggested some improvement in the economy in coming months.
Industry new vehicle production would benefit from projected higher export numbers over the balance of 2016. Export sales should come in around 360 000 units and total domestic production at around 635 000 units.
