an increase in used vehicle sales of 2.8%, year on year.
New vehicle sales experienced a sharp decline during the first month of 2016, however used car sales saw an increase during the same period.
This decline reflects the current sentiment in South Africa’s economy. This can be further illustrated through the latest consolidated sales data from the National Association of Automobile Manufacturers of South Africa, (NAAMSA) showing an industry decline in sales figures, year on year, of 6.9%.
Sales in all the segments experienced this decline, with Light Commercial Vehicles (LCVs) experiencing a sales decline of 8.3% over the last year.
“The decline in new vehicle sales comes as no surprise in the current economic climate, with consumer and business confidence at very low levels as a result of a number of macroeconomic factors,”
said Simphiwe Nghona, CEO of Motor Division at WesBank.
“The spike in rental sales is an anomaly, most likely due to rental companies choosing to re-fleet ahead of new car price increases. Despite this positive activity in the rental market, total industry sales still saw a decline.”
However, WesBank’s data shows that 70% of all vehicle loan applications were put towards used vehicle sales. With only 30% looking to buy new. This relates to an increase in used vehicle sales of 2.8%, year on year.
WesBank expects a continued shift to the used market throughout this year, as cash-strapped and budget-conscious consumers address affordability. Despite massive declines in the international oil price, consumers are unable to enjoy lower fuel prices due to the poor performance of the Rand.
“Consumers budgets will face increasing pressure this year in the form of rising interest rates and food-price inflation. While inflation is unavoidable, consumers who apply for credit can still take measures to accommodate future interest rate hikes,”
“We have already observed more customers opting for fixed interest rates, which now account for 55% of all transactions compared to 49% in January 2015.”