Bumpy ride ahead for new car sales
New car sales plunged last month by 13.2 percent to 26 077 units from the 30 026 new cars sold in April last year.
|||Cape Town - New vehicle sales appear to be heading for a bumpy ride for the rest of this year after car sales slumped last month despite the Easter holidays this year falling into the previous month.
Figures released yesterday showed that new car sales plunged last month by 13.2 percent to 26 077 units from the 30 026 new cars sold in April last year.
Read: Weak economy puts brakes on new vehicle sales
Sales of new new light commercial vehicles, bakkies and minibuses dropped year on year by 0.1 percent to 12 192 units, medium commercial vehicles by 24.3 percent to 588 units and heavy trucks and buses by 5.3 percent to 1 533 units.
Vehicle exports increased by 39.2 percent to 32 856 units from the 23 602 units exported in April last year.
Disappointing
Azar Jammine, the chief economist at Econometrix, said the sales growth figures for passenger vehicles was disappointing and suggested the forecast 10 percent decline in sales for this year might be too optimistic.
Jammine said car sales were expected to improve last month after the sharp decline in March, which had two fewer selling days because of the Easter public holidays.
He said the fact that car sales had not improved told him “consumers are taking strain, particularly in regard to spending on big-ticket items”.
Rudolf Mahoney, the head of brand and communication at WesBank, expects vehicle sales to continue to decline for the rest of the year and sales in the second half of the year to be worse than in the first half.
“We’re in for a very bumpy ride,” he said.
Mahoney said sales to car rental companies were up 58.3 percent in the first four months of the year in an attempt to pre-empt price increases and had bolstered sales.
He said WesBank vehicle finance application data also showed a shift in consumer demand from new to used vehicles.
Applications
Mahoney said overall applications increased by 4 percent last month, but applications for new car finance declined by 7 percent while applications for used-car finance increased by 9.26 percent.
He added that the average value of finance applications had increased by 11.7 percent, or R30 000, to R287 000 last month from R257 000 in April last year and customers were also opting to buy down.
Mahoney said there were many factors consumers could not control when buying a car, such as the cost of fuel, insurance and interest rates, which had pushed many into the used car market.
Isaac Matshego, an economist at Nedbank, said the outlook for domestic vehicle sales this year had been hurt by rising car prices, higher interest rates, rising inflation and subdued growth of disposable incomes.
Matshego said the latest vehicle sales numbers were consistent with recent indicators that pointed towards subdued demand growth for big-ticket items on the back of low consumer and business confidence, rising inflation and tight lending criteria.
BUSINESS REPORT