Car sales drop in July but commercial vehicles weather the storm

SA new-vehicle sales continued their downward trend in July and the 46,077 units reflected a decline of 3.7% from the 47,856 vehicles sold in July 2018.

Passenger car sales took the brunt of the market weakness and the 29,477 units sold were 8.2% down on July 2018. This was despite the car rental industry’s contribution accounting for a substantial 19.7% of new-car sales last month.

However, this was partially offset by growth in all of the commercial vehicle segments. Light commercial vehicles (LCVs), comprising bakkies and mini-buses, at 13,852 units, were 2.9% up compared with the corresponding month last year. Medium trucks at 801 units were up 14.9% and heavy trucks at 1,947 units were 21.4% higher.

The upward momentum on the export side continued to register substantial growth of 6,216 vehicles, a gain of 22.1% over the number of vehicles exported in July 2018.

The turnaround anticipated for the second half of the year has not yet been realised in the new-vehicle market, according to the National Association of Automobile Manufacturers of SA (Naamsa).

However, the lowering of the interest rate by 25 basis points as well as relief from lower fuel prices during July offered some reprieve for cash-strapped consumers.

“While the small interest rate cut during July was warmly welcomed by industry and consumers alike, it may take some more incentive from the Reserve Bank to jump-start the economy and entice consumers back into the new-vehicle market,” says Ghana Msibi, WesBank executive head of motor.

“While small, its effects will be enjoyed by household incomes in the longer term, but another cut before the end of the year would be welcome and effective,” he says.

“The economy remains tough,” says Msibi. “Retrenchments across the board are hitting all sectors hard, and the motor industry is feeling the effects of significantly reduced spending power. Consumers simply cannot afford to replace their vehicles, never mind enter the market for the first time.”

July was the longest selling month of the year with 23 working days. While this technically makes the market’s performance even worse, it is interesting to note that demand is increasing.

“WesBank experienced its best month this year in applications received for finance,” said Msibi. “While this clearly didn’t translate into sales, it is reassuring for the industry that consumers are at least shopping for vehicles. Industry has to understand what is limiting the conversion of this interest into actual deals — whether new or pre-owned vehicle purchases — which is likely driven primarily by affordability.

“Consumer behaviour in those deals that are concluded has also shifted significantly towards linked interest rates over the past 18 months. This is indicative of a market expecting interest rates to decline over the period of the contract and consumers being hopeful of savings over the contract term.”

TOP 40 SELLING NEW VEHICLES — JULY 2019

Toyota Hilux – 2,996

VW Polo Vivo – 2,621

Ford Ranger – 2,217

VW Polo – 2,076

Nissan NP200 – 1,730

Isuzu D-Max – 1,692

Toyota Hi-Ace – 1,520

Nissan NP300 – 982

Hyundai i20 - 863

Ford EcoSport - 839

Toyota Fortuner – 810

Kia Picanto - 800

Renault Kwid – 768

Toyota Etios – 762

Hyundai Grand i10 - 654

Suzuki Swift – 635

Toyota Corolla Quest – 608

VW Tiguan – 595

Toyota Rav4 – 584

Renault Sandero - 581

Datsun Go - 548

Ford Figo – 523

Toyota Avanza - 518

Nissan Almera - 466

BMW 3-Series – 456

VW Polo sedan - 436

Toyota Yaris - 425

Hyundai Tucson – 356

Mazda CX-3 - 354

Mazda CX-5 – 351

VW Golf - 308

Kia Rio - 300

Nissan X-Trail - 297

Renault Duster – 287

Mahindra Scorpio Pik-Up – 287

Toyota Landcruiser Pick Up – 263

Ford Everest - 258

Ford Fiesta - 257

Suzuki Celerio – 255

VW Amarok – 252

Hyundai Creta - 252

* List excludes Haval and Mercedes-Benz, which do not report their detailed monthly sales figures