Vehicle sales plummet
IJG Securities recently gave their take on the sharp plummet on vehicles sales for the month of January 2016. The report noted a sharp drop of 13.5% from the December sales which saw a total of 1583 vehicles drive off show room floors across the country.
“A total of 1,389 new vehicles were sold during January, a drop of 13.5% from the December sales of 1,583 and down 19.1% over January 2015, driven by a slowdown in both passenger and commercial vehicle sales. Rolling 12 month sales continued to contract after turning negative in December for the first time in 69 months, with the year on year 12 month percentage change -5.6% for January,” said IJG in its report.
Sales of passenger vehicles fell by 11.1% month on month, from 614 in December to 546 in January, down from a high of 910 in March 2015. On an annual basis, total sales of passenger vehicles fell by 26.5%. Commercial vehicle sales decreased 13.4% year on year to a sales figure of 843 vehicles, which was due to lower sales numbers of light, medium and heavy commercial vehicles. On a monthly basis, commercial vehicle sales was 13.0% lower than in December IJG noted.
Added IJG, “we have seen exceptionally strong vehicle sales through 2014 and 2015, fuelled by a strong consumer base supported by expansionary fiscal policy and real wage growth, but the latest figures show that this trend is losing momentum. Strong vehicle sales over the last two years have elevated the base substantially which has led to lower percentage growth figures, although the number of vehicles sold as a whole is still relatively strong.”
Concluded IJG, “we expect to see vehicle sales normalising somewhat at these levels. Downside risks to this are rising interest rates which may limit marginal lenders from qualifying for financing as well as banking sector liquidity which may limit the amount of loans available to finance vehicle purchases.