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New car sales drop continues  

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.

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