Bargains in the offing as vehicle sales stall
HOPES for an improvement in vehicle sales in the second half of the year have been dashed following disappointing sales in May - and it now looks like total sales for the full year will be down by more than 10%.
Car sales have displayed a declining long-term trend for the past 17 months, while light commercial volumes have been falling since mid-1996.
Motor manufacturers are unanimous in their belief that the volatility in financial markets and the JSE, upward pressure on money market interest rates, and the decline in the value of the rand has resulted in motorists postponing purchases.
Brand Pretorius, chief executive of McCarthy Motor Holdings, said he was worried about low daily sales during May in spite of there being more selling days than in April. "Following a disappointing April, we hoped the market would bottom out, but this did not happen," he says.
This trend was particularly evident in the commercial sectors, "amplifying once again the significant slowdown in economic activity and general lack of business confidence".
Significantly, the entry-level sector, normally a busy place for sales, is now also softening. John Cumming, Delta's director of sales and marketing, says this is because "personal savings are at record lows, credit finance is steep and, with the debt burden being so high, new car purchases are being postponed".
The National Association of Automobile Manufacturers of SA (Naamsa) says any sustained increase in interest rates will further dampen new vehicle sales.
Naamsa figures show total sales during May at 26 545, 13.6% below the 30 735 in the same month last year, although 3.6% above April's 25 599.
Total sales for the first five months of the year are therefore 12.6% below last year's numbers - 137 046 against 154 485.
Toyota topped the car sales list, followed by Volkswagen and Samcor. Delta was again the market leader in light commercial vehicles, ahead of Toyota and Samcor, while Mercedes-Benz led Toyota and Nissan in medium truck sales.
"With hopes for a reduction in interest rates fading fast, the sales cycle is likely to continue to be weak, putting increasing pressure on manufacturers and dealers, and possibly leading to more discounting to stimulate sales volumes," says Graham Hardy, marketing director of Volkswagen.