New Car Sales Plunge Further

New vehicle sales plunged again last month as the government curbed spending car rental firms continued to be hit by a drop in tourist arrivals and online taxi service Uber affected fleet renewals. Overall sales were down 8.6% to 54‚244 units compared to a year ago‚ National Association of Automobiles Manufacturers of SA (Naamsa) data released on Monday showed. Even exports plunged though that was attributed to “special circumstances”. Government purchases of new cars dropped 25%‚ an indication the state was reining in spending. Simphiwe Nghona‚ CEO of Wesbank’s Motor Division‚ said lower government purchases of new cars showed the state was extending the usage of existing vehicles for longer‚ possibly by spending more on vehicle maintenance.

Purchases by car rental firms fell 24% extending the 13% decline in September as low business confidence‚ the sharp drop in tourism and possible competition from online taxi service Uber tapered demand. “We suspect the Uber market could be making inroads into the rental market‚” Mr Nghona said. Although there was no empirical evidence at this stage to support his assumption‚ Mr Nghona believed Uber offered consumers a more convenient and economical mode of temporary transport than rentals.

Standard Bank head of vehicle asset finance Nicholas Nkosi believed the decline in exports was temporary and expected a rebound in the coming months. Of more concern‚ he said‚ was the 10.9% decline in new passenger vehicles. “This is massive. It is a reflection of the tough trading environment of car manufacturers as well as the continued strain on consumer affordability‚” he said. Vehicle exports‚ which have been on an upward path this year‚ were down 13% in October compared to last year.

Naamsa said the fall in exports was affected mainly by the new Ford Ranger‚ which was in the early stage of its launch phase. Only 325 Ford cars were exported last month compared with 6‚570 units exported in September and 3‚015 units exported in August. Exports by other manufacturers also declined‚ suggesting a possible slowdown in global markets. Naamsa said‚ however‚ it was on track to reach exports of 335‚000 cars this year.

-Fifi Peters/Business Day