New vehicle sales improved for the first time since February 2015, this November. According to the latest consolidated sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa) industry sales totaled 51 256 vehicles – representing year-on-year growth of 0.4%.
Sales through the dealer channel grew 7.9%, year-on-year, on the back of new vehicle launches, marketing incentives that and innovative finance deals. The rental channel saw year-on-year growth of 13.2% in November, while sales in the government channel declined 36.4% for the same period.
Passenger car and LCV sales through the dealer channel also indicated higher consumer demand. Passenger car sales at dealers grew 6.4%, year-on-year, while LCV sales at dealers grew 10% for the same period.
“At WesBank we’ve been working with our joint venture partners to introduce innovative finance offerings, such as guaranteed buyback deals, to help counteract rising car prices. Coupled with dealer incentives, these measures have helped make repayments more affordable for consumers,” said Simphiwe Nghona, CEO of Motor Division at WesBank. “Rental companies have also assisted November sales, by replacing some of their fleet ahead of the festive season.”
WesBank’s data for finance application volumes also reflected strong consumer demand in November. Application volumes increased 11%, year-on-year, with growth of 13% for new vehicles and 10% for used cars.
Historical data shows that new vehicles sales are intrinsically linked with interest rate movements. The first interest rate increase, in the current monetary tightening cycle, came into effect in January 2014. Combined with other economic factors this resulted in 2014’s new vehicle sales declining 0.7%.
In 2015 the market has seen two more rate hikes, of 25 basis points each, with new vehicle sales seeing a corresponding, continued decline. WesBank expects that the current interest rate tightening cycle will continue throughout 2016, with new vehicle sales remaining under pressure.
“While we welcome November’s positive sales results, however, we anticipate that it will be short-lived,” said Nghona. “We expect sales to soften in the coming months. Local interest rates will continue to increase, driven by a struggling rand, higher inflation – fueled by the drought – and the impact the looming US interest rate hikes, as well as other macro-economic headwinds.”
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