Sales in decline, but hope on the horizon
Decline in domestic sales was offset to a limited extent by continued growth in vehicle exports.
INDUSTRY domestic sales ended 2016 on a weak note with aggregate industry new vehicle sales for December 2016 at 41 639 units recording a decline of 7 519 vehicles or a fall of 15.3 percent compared to the total new vehicle sales of 49 158 units during the corresponding month of December 2015.
The December 2016 new passenger car market and light commercial vehicle market reflected a year on year volume change of -14 percent in the case of cars and -17.8 percent in the case of light commercial vehicles.
Sales of medium and heavy commercial vehicles declined by 18.2 percent year on year.
In contrast, export sales had recorded an improvement in December 2016 and at 18 668 units reflected a gain of 1 222 vehicles or seven percent compared to the 17 446 vehicles exported during December 2015.
For the third year in succession, new vehicle sales during 2016 in South Africa recorded a year on year decline.
The slowdown in the domestic economy, above average new vehicle inflationary pressures, increases in interest rates, pressure on disposable income and low levels of consumer confidence had contributed to a double digit decline in annual domestic sales volumes.
In the event, aggregate sales during 2016 fell by 11.4 percent in volume terms to 547 442 units compared to the sales total of 617 648 in 2015.
Overall, 2016 turned out to be another extremely difficult year for the South African automotive industry with domestic new vehicle sales progressively under pressure, particularly at dealer level, despite attractive sales incentives and a strong contribution by the car rental sector which accounted for an estimated 16.3 percent of new car sales during the year.
Industry trading conditions remained intensely competitive characterised by pressure on dealer margins.
However, 2016 vehicle exports represented the highest annual industry export figure on record and total vehicle exports at 344 822 units were up on the 333 847 vehicles exported in 2015.
Assuming further improvement in the global economy industry export sales during 2017 could improve by some 30 000 vehicles or about 10 percent to reach a conservative projection of 375 000 export units.
2017 is expected to be another difficult year for the domestic SA auto industry, however, a modest improvement in new vehicle sales is expected during the second half of 2017.
Industry production levels, on the back of expected further growth in vehicle exports, should however remain in an upward phase.
Internationally, volatile and uncertain conditions are likely to prevail during 2017.
Elevated geo-political tensions and political uncertainty in major advanced economies associated with elections could heighten global risk aversion and trigger confidence shocks.
Despite these considerations, the global economic outlook at this stage remains positive and should continue to lend support to South Africa’s improving vehicle export performance.
Internationally and domestically, vehicle manufacturers would continue to focus on new models and products through sustained investment and new technologies.
Technologies such as artificial intelligence could begin to reflect a tangible impact across sectors.
Autonomous vehicles and driver assisted automatic systems as well as increased use of information technology in vehicles were likely to feature in the future.
HAVE YOUR SAY
Like our Facebook page, follow us on Twitter and Instagram
For news straight to your phone, add us on BBM 58F3D7A7 or WhatsApp 082 421 6033
