01 November 2013: Industrial action and subsequent constraints on stock levels affected both local sales and exports of new vehicles last month, according to the latest figures released by the National Association of Automobile Manufacturers of South Africa (NAAMSA).
Rudolf Mahoney, Head of Research at WesBank, South Africa’s leading asset-based financial solutions provider, says the data shows that local sales of new vehicles fell 2.90% year-on-year to 56 927, while exports declined by a significant 15.1% compared with the same period last year.
“Overall, sales of passenger vehicles were worst affected in October, with a decline of 4.4%; while in contrast sales of light commercial vehicles (LCVs) increased by 0.2%, bouncing back from the steep 10% decline recorded the previous month. This indicates that the effect of the industrial action and subsequent supply shortages should only affect the one month of vehicle sales.”
According to WesBank book data, the outlook remains positive with continued strong consumer demand. “We recorded the highest ever number of applications in October, up 0.8% year-on-year to 121 156.
“Consumer demand also appears to have shifted towards the used car market, with a 3% increase in used car applications. In contrast, the number of applications for finance on new vehicles fell by 3%,” says Mahoney.
WesBank’s Used:New ratio of financed transactions also moved closer to the used market, from 1.22 in September 2013 to 1.33 last month. “As more sales data emerges over the coming months, we will be able to identify whether this is a more permanent trend or whether it has arisen as a result of the stock supply situation.”
Mahoney says there are a number of factors still buoying the demand for new vehicles, including the low interest rate environment and assistance from original equipment manufacturers (OEMs) on vehicle trade-ins. “Consumer indebtedness does remain a concern; however, and this, combined with sub-optimal GDP growth, is preventing the market from achieving further significant growth.”
“While we do not foresee further impact from the supply shortages in the local car market; we do expect overall growth in new vehicle sales for 2013 to remain in the low single digits, moderating further from year-to-date growth of 3.90% to around 2.5%, in line with our previous forecasts,” concludes Mahoney.