A sparkle of promise for new vehicle sales in April went on for a short period as May purchases continue plummeting.
National Automobile Association of South Africa (Naamsa) featured painted a dreary vehicle sales picture for May.
“Industry sale for May plunged 5.7 percent to 40,506 units compared to May 2018,” according to Naamsa.
WesBank Executive Head of Motor, Ghana Msibi concurs with Naamsa, saying they have “cautioned against any expectations of hopes of a turnaround a month ago.”
“April sales had represented a marginal 0.7 percent increase in sales within a short sales month. May sales return to a picture more representative of the rest of the year,” explained Msibi.
There were no winners in the various segment performances, apart from a marginal 0.3 percent gain in Medium Commercials.
Passenger cars declined 1.4 percent to 26,170, while Light Commercial Vehicles (LCVs) traded 13 percent year-on-year.
While volumes month-on-month increased during May because of a standard sales month versus April’s fewer selling days.
“Dealers continued their swings-and-roundabouts experience, scoring on passenger cars and losing on LCVs,” said Msibi.
Demand for passenger cars through the retail network translated into a 2.6 percent increase in sales through this channel.
But consumers are less interested in LCVs, dealer channel sales losing 15.1 percent in this segment.
Rental market performance was also low on demand during May.
“Household incomes remain under pressure. Consider that fuel price inflation year-on-year is 9.2 percent,” said Msibi.
WesBank’s average deal size for new vehicles has increased more in line with official inflation at 4.8 percent.
The difference in fuel price since January this year is as much as R2.69 for every litre of 93 unleaded.
Consumers will look to the new government for reassurance, as will the South African motor industry be hungry for more stability.
“While the government has already taken major strides in policy reform, the new cabinet has the responsibility to instill more stability in the economy.
These offer consumers renewed confidence to support their mobility,” said Msibi.
“Government needs to offer clarity on critical paths to improvement in the stability of State-Owned Enterprises, the mining charter, and land expropriation hastily.
This will contribute to a more stable interest rate cycle and boost the motor industry’s significant contributions to the manufacturing sector and Gross Domestic Products.
It will offer renewed certainty for corporate South Africa and give consumers the wherewithal to make confident purchase decisions.”
These macro-economic influences will go far to realising improved second-half sales, required if the industry will claw back to an annual market down with 1percent said Msibi.
Market performance year-to-date paints a more positive picture, breaking through the 200,000-unit volume barrier.Follow us on Social Media