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.