Sun. Sep 15th, 2019

Drop in new vehicle sales leads declining motor trade sector for June

Motor trade sales continued to suffer in South Africa in June thanks to poor economic conditions and a lack of new and used vehicle sales.

drop in new vehicle sales leads declining motor trade sector for june - Drop in new vehicle sales leads declining motor trade sector for June

The Statistics South Africa (StatsSA) report for motor trade sales for June 2019 has shown the sector has suffered a year-on-year decline of 1.6% thanks predominantly to poor new vehicle sales.

Suffering new vehicle sales hampers motor trade sector

Measured on current prices, motor trade sales decreased off the back of negative annual growth rates for new and used vehicle purchases, workshop income, and income from fuel sales.

The largest negative annual growth rates were experienced by:

  • New vehicles (-3.9%)
  • Workshop income (-2.9%)
  • Used vehicles (-2.6%)

Not all bad news

The overall picture is slightly more positive though as the industry recovers from a relatively slow start to the year and is competing with pretty explosive growth in 201.

Motor trade sales June image 1 - Drop in new vehicle sales leads declining motor trade sector for June
Photo: StatsSA motor trade sales report for June 2019

The below graph shows consistent growth of around 5% or more for the second half and 2017 and most of 2018 until the floor fell out in December.

Motor trade sales June image 2 - Drop in new vehicle sales leads declining motor trade sector for June
Photo: StatsSA motor trade sales report for June 2019

The huge growth of more than 10% in March 2019 has unfortunately proved to be an exception rather than a positive sign for the future as growth has returned to negative territory.

Seasonally-adjusted motor trade sales increased by 1.2% in June 2019 compared with May 2019, which at least shows the industry is on an upward trajectory after month-on-month changes of -3.7% in May 2019 and 4.7% in April 2019.

This point is further supported by the 3.1% growth in motor trade sales from the first quarter to the second.

This was mainly driven by:

  • Fuel (5.1% and contributing 1.4 percentage points to the total)
  • Accessories (5.6% and contributing 1.0 percentage point to the total)

Looking ahead to the rest of 2019

Motor trade sales are likely to struggle for the remainder of 2019 as the South Africans continue to battle to make ends meet in a tanking economy.

July is likely to show significant growth in fuel sales after the petrol price was reduced by R1 at the start of the month and this might have a positive impact on new and used car sales too, but it remains to be seen whether it will be enough to show positive growth overall.

With the petrol price heading back up again, it is difficult to imagine the motor trade sales sector getting anywhere close to the growth it showed in 2018.

“The continued decline in new vehicle sales reflects the current political and economic environment,” said chairperson of the National Automobile Dealers’ Association Mark Dommisse.

“Consumers will continue delaying decisions on big-ticket items such as new vehicles until we have greater stability all round.”

Mark Dommisse

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