October new vehicle sales provide further evidence that the sharply negative trend has been arrested and that the market is in the process of bottoming out.
However, according to Brand Pretorius, chief executive of McCarthy Limited, the motor industry is not out of the woods as yet.
According to the latest results released by the National Association of Automobile Manufacturers of South Africa (Naamsa) and Associated Motor Holding (AMH) yesterday, sales last month showed only a marginal 0.5% improvement over sales recorded in September, despite the fact that October had 6.5% more selling days (24.5 days compared to 23).
The total vehicle sales of 36 082 units also showed a 12.5% decline on sales recorded in October 2008.
Sales of commercial vehicles remain depressed. The Light Commercial Vehicle Segment recorded a 24.4% decline in sales when compared to October last year, totalling 9 908 sales. Sales in the Medium Commercial Vehicle segment dropped by 22.7% to 627 units and Heavy Commercial Vehicles by a substantial 46,4% to only 955 units.
“Commercial vehicle sales represent an accurate barometer of real economic activity and the current level of business confidence,” said Pretorius. “We observe the same trend in the car market namely subdued demand from fleet-owners who are hesitant to renew fleets.”
The 24 592 passenger vehicles sold last month were again underpinned by purchases from car rental companies. Over the three month period July to September, sales to rental companies accounted for over 20% of the market and it is estimated that more than 4 000 cars went into those fleets during October.
According to Pretorius, two additional factors had a positive influence on car sales last month.
“Firstly, the credit application approval rate improved slightly due to more creditworthy customers re-entering the market. Secondly, customers with vehicles to trade-in are getting pleasant surprises as a result of more attractive trade-in prices being offered,” said Pretorius. “This is happening due to the shortage of quality used cars on the one hand and a healthy demand on the other hand. More favourable trade-in values are undoubtedly enhancing new vehicle affordability.”
On a year-to-date basis the total market is now down by a significant 28.8%. Pretorius said that it is likely that the numbers will show a very similar decline by year-end.
STORY COURTESY OF WILKEN COMMUNICATIONS
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