The recent interest rate cut helped to increase the total vehicle sales by 5,8 per cent to 29 995 units compared with June last year, according to the latest Naamsa figures.
To view June's new vehicle sales figures, click here.
Vehicle sales in June improved following the reduction in the interest rate, with total sales increasing by 5,8 per cent to 29 995 units compared with June last year, according to the latest figures from the National Association of Automobile Manufacturers of South Africa (Naamsa).
The association said June sales showed encouraging gains after a slow start to the month. Sales in all four segments recorded improvements compared with the corresponding month in 2002, as well as on May 2003. In June last year 28 346 new vehicles were sold, 1 649 units fewer than this year.
June 2003 new car sales came in at 19 864 units, a gain of 904 units or 4,7 per cent compared with the 18 960 units sales recorded during the corresponding month of June in 2002. It was also a fairly sharp improvement of 2 484 units or 14,3 per cent compared with the 17 380 sales recorded in May 2003. The daily average new car sales rate for June also improved significantly. It was over 23 per cent up on May 2003.
Naamsa said sales of new light commercial vehicles, bakkies and minibuses totalled 8 774 units for June. This was an increase of 483 units or 5,8 per cent compared with the 8 291 units sold during the corresponding month last year. It was also an increase of 5,1 per cent when compared with May’s sales figures.
Sales of vehicles in the medium and heavy truck segments of the industry during June continued their remarkably strong growth momentum.
Medium commercials came in a 497 units, an improvement of 13,9 per cent or 61 units, while heavy trucks and buses came in at 860 units, a gain of 30,5 per cent or 201 units over the corresponding month last year. Naamsa commented that sales of medium and heavy commercial vehicles should continue to receive support from positive investment sentiment and replacement demand.
Exports of new vehicles during May registered marginal declines. Year-to-date aggregate exports of vehicles for the past five months of 2003 were 5,9 per cent below the vehicle exports recorded during the corresponding period last year.
Total exports for May were 10 359 units compared with 10 983 in April. For January to May, a total of 50 744 units were exported compared with 53 922 units in the corresponding months last year.
Naamsa said that domestic new vehicle sales remained on track to record modest growth for 2003 as a whole. “Demand for and sales of new motor vehicles during the second half of 2003 should receive support from further expected reductions in interest rates, an improvement in new vehicle affordability, in real terms, as a result of price restraint by manufacturers, lower inflation and a modest improvement in the financial position of individuals and corporations,” said the statement from the association.
Pretorius not celebrating yet
Brand Pretorius, chairman of McCarthy Motor Holdings, has warned that although vehicle sales have increased in June, it is too early to celebrate.
Brand Pretorius, chairman of McCarthy Motor Holdings, has warned that though vehicle sales have increased in June, it is too early to celebrate.
Pretorius notes that, while sales were up, feedback from the group’s dealerships has revealed that there is not – as yet – a meaningful increase in showroom traffic. “It is our view that this good month does not signify a sustainable upturn in the market,” he says.
But he is encouraged by the June sales figures. “I am pleased to note that all four segments of the market showed meaningful increases over sales recorded in June 2002.”
Pretorius notes that what makes these increases especially heartening is the fact that there were fewer selling days in June. “The number of selling days actually reduced by 6,4 per cent while total sales across all segments increased by 10,9 per cent,” Pretorius says.
The McCarthy chairman says that the lowering of the interest rates and new model introductions boosted the market. “Only one economic factor changed during the course of the month, namely the 1,5 per cent reduction in the prime rate. It seems that the rate reduction improved the market sentiment and enhanced the propensity to buy.
“In addition, the launch of two new models, namely the Renault Megane II and the Volkswagen Polo Classic, played an important role in boosting sales in June,” he says.
Pretorius maintains that innovative financing packages also bolstered the market. “Some manufacturers and importers are offering special ‘low interest’ packages to customers – such as ‘prime less five per cent’. This certainly enhances affordability,” he notes. In addition, he says sales rose because of vehicle sales to government departments, which were “apparently at a high level”.
Pretorius says the good news for motorists is that it remains a buyer’s market. “The current market is characterised by manufacturers and importers, in collaboration with their dealers, offering very attractive packages to customers in an effort to normalise stock levels and improve market share,” he says.
But Pretorius points out that the motor industry still needs to enjoy some good fortune if it is to exceed last year’s vehicle sales. “One should not forget to look at the bigger picture. On a year-to-date basis, the passenger car market is still 0,5 per cent down on 2002 while the LCV market is 3,8 per cent down,” he says.
Pretorius believes though that prospects are reasonable. “The combination of modest vehicle price increases and further interest rate reduction should lead to a sustainable upturn in sales over the medium term,” he says.
He added that a higher level of business confidence and enhanced vehicle affordability hold the key to future growth in the new vehicle market. “These factors are both critical if we want to match or exceed last year’s figures,” he says.
To view June's new vehicle sales figures, click here.
Original article from Car