NAAMSA comments on January vehicle sales

However, sales in the medium and heavy commercial vehicle segments had registered substantial declines compared to the corresponding month last year - suggesting continued subdued levels of economic activity. The welcome improvement in industry aggregate new car and light commercial vehicles sales should be seen in the context of the extremely depressed and low base in January last year characterised, at the time, by a sharp decline in demand as a result of the impact of the global economic and financial crisis. To illustrate the extent of the base effect, the January market last year represented the worst new car market in over eight years. Nevertheless and in the event, total industry sales had improved by 5 112 units or 15,5% to 38 075 units from 32 963 units in January, last year.

Aggregate sales exceed expectations

Overall, out of the total NAAMSA reported industry sales of 34 113 vehicles, 80,8% or 27 558 units represented dealer/retail sales, 10,2% represented sales to the car rental industry, 5,4% industry corporate fleet sales and 3,5% sales to Government.

Aggregate industry new car sales during January, 2010 had exceeded expectations and at 27 008 units reflected a welcome improvement of 4518 units or 20,0% compared to the 22 490 new cars sold during January, 2009.

Sales of industry new light commercial vehicles, bakkies and minibuses at 9805 units during January, 2010 reflected an improvement of 864 units or 9,7% compared to the 8941 units of the corresponding month last year.

Sales of vehicles in the medium and heavy truck segments of the industry had started the year on weak note and the January, 2010 sales at 452 units and 810 units, respectively, had recorded declines of 134 units or 22,8%, in the case of medium commercials, and 136 units or 14,4% in the case of heavy trucks and buses - compared to the corresponding month last year. Bus sales had however expanded year on year by 37,2% in volume terms.

Exports decline

Due to inventory constraints, production, shipping and timing issues - exports of South African produced motor vehicles during January, 2010 at 9130 vehicles had registered a decline of 1585 units or 14,8% compared to the 10 715 vehicles exported during January last year. Looking at the international environment, clear signs had emerged of a revival in demand for South African produced motor vehicles in foreign markets. With all of the manufacturing plants back in production since the middle of January, export sales were expected to improve from February onwards. At this stage manufacturer's projections suggested that overall industry export sales could grow by about 32% from last year's level of 174 952 vehicles.

2010 could boost demand rental industry

The future direction of new vehicle sales would be determined by underlying economic fundamentals. The cumulative 5% decline in interest rates between end 2008 and August, 2009 should contribute to an improvement in the financial position of households and businesses and stimulate demand for new vehicles. Other factors which would influence vehicle sales positively during 2010 included expected economic growth of 2% plus, the 2010 Soccer World Cup Event which would boost demand by the car rental industry, promote tourism and spending, improved vehicle supply and enhanced new vehicle affordability on the back of relatively stable new vehicle pricing. The general outlook for domestic sales for 2010 was for a slow improvement in demand as the economy emerged from recession. Aggregate domestic sales could increase by between 7% and 10%, however, the improvement would be off a very low base.

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