Category Archives: Vehicle Sales

A total of 1,066 vehicles were sold in December, a 19.1% m/m drop from the 1,317 vehicles sold in November, and 32.7% lower than December 2015 when 1,583 vehicles were sold. For the calendar year of 2016, 16,598 new vehicles were sold, down 21.9% from the 21,246 vehicles sold over the previous calendar year. Vehicle sales have been lower than both 2015 and 2014, but still slightly ahead of 2013 levels.

Vehicle sales have been contracting on a year on year basis since mid-2015. The slowdown has been felt in both passenger and commercial vehicles, with passenger vehicle sales down 28.3% y/y and commercial vehicle sales down 35.4%. Within the commercial vehicle segments the light commercial category, which makes up the bulk of sales, has decreased by 32.2% y/y, while medium commercial vehicles sales have decreased by 28% y/y and heavy commercial vehicle sales have decreased by 76.4% y/y.

Passenger vehicle sales decreased by 17.8% m/m to 440 vehicles in December, while commercial vehicles sales decreased by 19.9% m/m to 626. This brings the total number of passenger and commercial vehicles sold in 2016 to 7,006 and 9,592 respectively. Of the 9,592 commercial automobiles sold, 8,838 were classified as light, 277 as medium and 477 as heavy commercial.

In 2016 Toyota and Volkswagen dominated the passenger vehicle market based on the number of new vehicles sold. Toyota and Volkswagen claimed 29% and 28% of the market respectively. They were followed by Ford at 7% and Mercedes at 5%. The rest of the passenger vehicle market remains very fragmented.

Toyota also remains the leader in light commercial vehicle sales with 48% of the market, followed by Nissan at 16%. Ford and Isuzu each claimed 11% of the number of light commercial vehicles sold in 2016. In the heavy category, Scania is the largest seller, commanding 43% of the market share.

The Bottom Line

Throughout the period of 2014 all the way to mid-2015, we saw robust growth in vehicle sales, which was driven by a strong consumer base supported by expansionary fiscal and monetary policy and real wage growth. However, 2016 was not a particularly good year for new vehicles as December numbers brought the year to a disappointing close. The slowdown was driven by two main factors. Firstly, the reduction in government spending had a direct and indirect effect on the demand for new vehicles. Both direct orders from government and the weaker economic environment have reduced the demand for capital goods. Secondly, higher interest rates and amendments to the Credit Agreement Act (which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months) have reduced the availability of credit used to purchase these capital goods.

We expect the slowdown to continue into 2017. The full effect of interest rate increases normally takes 18 to 24 months to filter through to all areas of the economy. Additionally, lower government spending on capital expenditure should also put pressure on vehicle sales for the foreseeable future.

A total of 1,317 vehicles were sold in November, a strong bounce from the low witnessed last month, with the value being 13.8% higher than October’s monthly figure. Despite higher volumes sold on a monthly basis, the November figure is still 23.5% lower than that of November 2015. Since January this year, 15,532 new vehicles have been sold, down 21.0% from the number of vehicles sold over the comparable period last year. Year to date vehicle sales have been slower than both 2015 and 2014, but is still slightly ahead of 2013 levels.

Vehicle sales have been contracting on a year on year basis since mid-2015. The slowdown has been felt in both passenger and commercial vehicles, with passenger vehicle sales down 9.0% y/y and commercial vehicle sales down 31.0%. Within the commercial vehicle segments the light commercial category, which makes up the bulk of sales, has decreased by 32.8% y/y, while heavy commercial vehicle sales have decreased by 21.9%. Contrary to these contractions medium commercial vehicle sales have increased by 25% y/y, however, in nominal terms this amounts to only 6 additional vehicles versus last November.

Passenger vehicle sales increased by 16.3% m/m to 535 vehicles in November, while commercial vehicles sales increased by 12.2% m/m to 782. This brings the total number of passenger and commercial vehicles sold in 2016 to 6,566 and 8,966 respectively. Of the 8,966 commercial automobiles, 8,247 were classified as light, 259 as medium and 460 as heavy commercial.

On a year to date basis, Toyota and Volkswagen dominated the passenger vehicle market based on the number of vehicles sold. Toyota and Volkswagen claimed 27% and 26% of the market respectively. They were followed by Ford at 6% and Mercedes at 5%. The rest of the passenger vehicle market is very fragmented.

Toyota remains the leader in light commercial vehicle sales with 44% of the market, followed by Nissan at 15%. Ford and Isuzu each claimed 10% of the number of light commercial vehicles sold in 2016. In the heavy category, Scania is the largest seller, commanding 44% of the market share.

The Bottom Line

Throughout the period of 2014 all the way to mid-2015, we have seen robust growth in vehicle sales, which was driven by a strong consumer base supported by expansionary fiscal and monetary policy and real wage growth. However, vehicle sales have seen a severe contraction in 2016, but the slight uptick in November is encouraging, although it might simply be seasonal. This year’s slowdown has largely been a result of higher interest rates and amendments to the Credit Agreement Act., which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months. Furthermore, reduction in government spending (directly on vehicles and otherwise), and a generally weak economic climate have adversely impacted the demand for vehicles.

Going forward we expect the slowdown to continue. Interest rates may increase in response to increases by the US Federal reserve. Additionally, the adverse effects of lower government spending on capital expenditure should also put pressure on vehicle sales for the foreseeable future.

New Vehicle Sales – October 2016

A total of 1,157 vehicles were sold in October, the lowest monthly figure since February 2013. This represents a 7.6% decrease in the number of vehicles sold in September 2016 and 34.5% decline from the number of vehicles sold in October 2015. Since January this year, 14,215 vehicles have been sold, down 20.8% from the number of vehicles sold over the comparable period last year. Year to date vehicle sales have been slower than both 2015 and 2014, but is still ahead of 2013 levels.

Vehicle sales have been contracting on a year on year basis since the end of 2015. The slowdown has been felt by passenger and commercial vehicles alike, with passenger sales down 36.7% y/y and commercial vehicles down 33.0%. Within the commercial vehicle segments the medium and heavy segments displayed the largest slowdown, decreasing 65.1% y/y and 45.5% y/y respectively.

Passenger vehicles declined by 9.6% m/m to only 460 vehicles in October. Commercial vehicles sales decreased 6.2% m/m to 697. This brings the total number of passenger and commercial vehicles sold in 2016 to 6,031 and 8,184 respectively. Of the 8,184 commercial automobiles, 7,545 were classified as light, 229 as medium and 410 as heavy commercial.

On a year to date basis, Toyota and Volkswagen dominated the passenger vehicle market based on the number of vehicles sold. Toyota and Volkswagen each claimed 27% of the market. They were followed by ford at 7% and Mercedes at 5%. The rest of the passenger market is very fragmented.

Toyota was also the leader in light commercial vehicle sales with 44% of the market, followed by Nissan at 15%. Ford and Isuzu each claimed 10% of the number of light commercial vehicles sold in 2016. In the heavy category, Scania is the largest seller, commanding 41% of the market share.

The Bottom Line

Vehicle sales have seen serious contraction in 2016 for several reasons. Firstly, higher interest rates have decreased spending on capital goods, which are normally financed by credit. Secondly amendments to the credit act were enacted with the specific aim of discouraging spending on unproductive goods by requiring a 10% deposit. Lastly and most importantly, government spending on both salaries and capital goods have been cut to the bone in the most recent medium term budget review.

Going forward we expect the slowdown to continue. Interest rates may rise further should a credit rating downgrade in South Africa or Namibia materialise. The adverse effects of lower government spending on capital expenditure should also put pressure on vehicle sales for the foreseeable future.