According to the National Association of Automobile Manufacturers of South Africa (Naamsa), total industry sales declined by 1.4 percent year-on-year, with a total of 55 722 units sold. Of that total, passenger sales accounted for 37 953 units – a 2.7 percent decline, year-on-year, while the Light Commercial Vehicle (LCV) segment moved 14 942 units, representing year-on-year growth of 2.1 percent. Dealer sales declined by 1.8 percent, year-on-year, with rental fleet sales up by 3.6 percent, year-on-year, mitigating the effects of a shrinking market.
WesBank data shows applications for credit grew by 17.5 percent, year-on-year, with the lion’s share of demand seen in used-car finance applications, with 17.7 percent year-on-year growth. WesBank attributes the decline in demand for new vehicles to a number of factors, including substantial price increases on new vehicles, interest rate hikes and buyers exhausting their affordability measures.
Compared to the same period last year, the average deal value for new vehicles has grown by 7.9 percent, outpacing the country’s current inflation rate. Those buyers who do choose to purchase a new vehicle have to contend with higher interest rates. The most recent decision by the reserve bank saw a 25 basis points hike and a shrinking number of options to reduce monthly repayments. The average contract period for new vehicles is 69.27 months, fast approaching the 72-month limit imposed by banks, with the average vehicle loan application size increasing to R207 612 in August 2014 from R207 064 in July 2014.
WesBank anticipates the market will continue to see a shift to used vehicles, where buyers find better value for money. The used-to-new ratio is currently at 1.43:1, a high last seen in January 2012 when the new vehicle industry was recovering from a down cycle in the economy.
Analysts predict the alleviation at the fuel pumps for consumers will have very little impact on vehicle sales but stability in the motor industry - after the wage strikes - will give investor confidence as the export market continues to impress.