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Challenging 2015 projected for motor industry

According to the National Association of Automobile Manufacturers of South Africa (NAAMSA) in their recently released annual sales overview, new vehicle sales in southern Africa showed a yearly decline for 2014.
This was the first time in five years that annual sales declined. Sales grew every year from 2010 through 2013.
The association said, “the slowdown in the economy, two interest rate increases and above new vehicle average price inflation contributed to a fall in domestic sales volumes of 0.7% for the year.”
“In the event, the marginal decline in aggregate sales during 2014 of 0.7 % in volume terms compares to annual growth in total sales of 24.7 % year on year in 2010, 16.1% in 2011, 10.2% in 2012 and 2.9% in 2013,” NAAMSA added.

On balance, 2014 turned out to be a difficult year for the South African automotive industry with domestic new vehicle sales under pressure particularly at dealer level despite attractive incentives and a strong contribution by the car rental sector which accounted for an estimated 14.0% of new car sales during the year.
Sales of heavy and extra heavy commercial vehicles performed relatively well and recorded noteworthy year on year gains.
Meanwhile NAAMSA said the outlook for 2015 remains uninspiring with the best case scenario, at this stage, one of marginal volume growth in domestic sales.
NAAMSA projections are based on expectations of an improvement in South Africa’s economic growth rate to between 2.0% and 2.5% in 2015, relative stability in automotive industry industrial relations, stable interest rates and credit ratings as well as prospects for moderating consumer price inflation.
“These expected positive factors will be offset to some extent by higher than inflation new vehicle price increases as a result of the weakness in the Rand for most of 2013 and during 2014 against major international currencies,” said the association.
“The depreciation in the exchange rate resulted in significant cost pressures in respect of imported content, used in the production of locally manufactured vehicles, and more particularly, in the case of imported built up vehicles,” NAAMSA added.
However provided the expectations materialised, aggregate new vehicle sales volume growth during 2015 could improve by around 4.0%.
This would represent a commendable performance in relation to the fairly high sales base established over the past few years, said NAAMSA.Furthermore, demand by the car rental industry was expected to remain strong during 2015 and should continue to make a positive contribution on the back of further growth in tourism and business travel.

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