SA new vehicle sales increased for fourth straight month
While it may still take a while for the local new vehicle market to show signs of recovery, South African sales for August indicate a reversal of the market’s misfortunes during the first semester.
Leading asset finance institution, Wesbank, said this week its applications for new vehicle finance in South Africa grew by almost 10% in August.
“Over the past month’s 22 working days, finance application volumes reached the highest level for this year. Demand for new vehicle finance, as measured by the volume of applications received, grew 9.74%. This marked a trend of four consecutive months of growth, averaging 7.4%” said Wesbank’s Head of Brand and Communications, Rudolf Maloney.
In terms of the overall market, aggregated sales data from the National Association of Automobile Manufacturers of South Africa show year-on-year growth of 6.7% for the past month, with total sales of 49,222 units.
Passenger car sales through the dealer channel grew 11.2%, while light commercial vehicle sales through dealers were up 6.7%, year-on-year. Year-to-date, new vehicle sales are up 0.6%.
At the same time, a marked shift has occurred away from used vehicles. Wesbank’s data shows a third straigth month of decline in the number of applications received to finance used vehicles. In August application volumes fell 2.28%, year-on-year. Year-to-date, used vehicle finance applications are down 0.5%.
“This growth is extremely positive. The shift back to new was expected and inevitable, especially with a dwindling supply of quality used vehicles,” said Mahoney. “Meanwhile, new vehicle price inflation is slowing down. It is evident that manufacturers and dealers have come to realise that right now it’s a value-for-money play, and are offering highly attractive incentives to attract customers into the new car market,” he added.
Strong sales of used vehicles over the past 24 months has resulted in depleted stock levels of quality used cars, with demand driving up prices. In August the average value of a used vehicle deal was 8.4% higher than the same period in 2016. WesBank’s book data indicates that used car prices grew an average of 7.9% over the past three months.
In contrast, average transaction values for new cars show a trend of slowing down. The average new vehicle deal in August 2017 was just 1.64% higher than in August 2016. Over the last three months, the value of an average new vehicle finance deal has grown just 2.6%.
“Interest rates are also lower, which has had a significant impact on consumer sentiment and willingness to apply for credit. Further rate cuts are anticipated for September and this will stimulate the market for the remainder of 2017,” said Mahoney.