Rental industry, Mercedes C-class push new car sales ahead by 17%
September 5, 2007
By Roy Cokayne
Pretoria - Sales of new cars last month recovered from four poor months: sales notched 37 719 units, a 17 percent increase on sales in July.
Last month's sales figures were only 3.8 percent lower than last August's record sales of 39 203 units.
However, Tony Twine, a motor industry analyst, stressed that these figures did not indicate a revival in consumer spending.
Twine said the apparent revival in car sales came from the impact of rental industry purchases in the entry level segment and increased sales in the premium market because of the launch of the new Mercedes-Benz C-Class.
"Both these growth segments indicate that this isn't a revival of ebullient consumer spending but an improvement for very specific reasons," Twine said.
"In the light commercial vehicle market, year-to-date sales of car-derived pickups are now within 2 percentage points of sales of one-ton pickups, compared to running at twice the rate of one-ton pickup sales two years ago.
"We see a shift in the demand pattern, with a fatigued consumer alongside a very buoyant corporate sector."
The "fairly dismal" sales months since April were caused by problems with the introduction of the eNatis vehicle registration system, the National Credit Act and increases in interest rates and the price of new vehicles.
Twine doubted that car sales could be sustained above 35 000 units a month through the end of next year.
He added that Reserve Bank monetary policy decisions would be more difficult to make as the bank achieved its perceived intention of putting the brakes on consumer spending, but simultaneously business was "alive and flourishing".
"Surely they [the bank] don't want to turn that into an economic rout."
Figures released by the National Association of Automobile Manufacturers of SA yesterday revealed that sales of new light commercial vehicles, bakkies and minibuses declined last month by almost 3 percent to 16 925 units compared with the same month last year.
Sales of medium commercial vehicles improved by 6 percent to 1 403 units and heavy truck and bus sales improved by 8 percent to 1 993 units.
Mike Glendinning, the sales and marketing director at Volkswagen South Africa, said that with household debt at record high levels and interest rates potentially increasing again next month, the performance of the new car market in the remaining months of this year would undoubtedly depend more heavily on non-dealer demand, particularly the car rental industry.
Brand Pretorius, the chairman of McCarthy Motors, expressed concern about the first signs of a slowdown in the commercial vehicle market.
Pretorius said both the medium and heavy commercial vehicle segments had regularly shown growth of close to 20 percent over the past four years, but this rate had slowed to single digits last month.
He attributed this decline largely to a general slowdown in macroeconomic growth.
Pretorius said it appeared that the commercial vehicle market was entering a period of consolidation.
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