- Every vehicle market segment hit by downgrade
- If you’re thinking of buying – the do it now
- ‘Sales performance is bad news’ – Mahoney
JOHANNESBURG, South Africa – The South African new car market immediately felt the repercussions of the country’s economic downgrade in April 2017 as total sales plummeted by 13.4% – down to only 34 956 – the worst performance since December 2009.
Every market segments was hit, with cars and light commercials dropping by 13.7% and 13.3% res[oectively. Until March new sales had seen year-to-date growth of 1.9% but April’s negative sales performance results in a year-to-date decline of 1.4%.
Rudolf Mahoney, head of brand and communications at WesBank, told The Corner in a media release: “This sales performance is bad news not only for auto industry but for the whole country.
“Historically, the performance of the new vehicle market has been a leading indicator of economic activity, suggesting that the outlook for 2017 could be worse than initially forecast. One should also factor in that the April decline was compounded by several public holidays.”
‘NOTABLE’ FUEL-PRICE RISE’
Confidence, the WesBank report added, had been shaken by news that ratings agencies have given the South African economy “junk” status; the fuel price has risen – WesBank describes it as “notable” – and added that the prospect of negative GDP growth was also likely to launch a cycle of interest rate increases.
People buying a new car through April reacted sharply. WesBank, Mahoney reported, saw a 12.6% increase over March in fixed-interest vehicle finance agreements – an indication that buyers wanted to hedge the risk of more rate increases.
WesBank data also shows that demand for new and used vehicle finance, measured by the number of finance applications, fell sharply through April.
Finance applications declined by 10.7%; used-vehicle finance by 15.3%.
‘IF YOU NEED A CAR, MOVE NOW’
“Even though April only had 18 working days,” Mahoney’s release said, “there was a significant decline in market activity – the daily rate of applications fell by 6.4%.”
He added personally: “There is no mistaking this behaviour as people and businesses reacting to the economic downgrade and factors that led to it. If you’re in the market for a car right now spend prudently and prepare for an uncertain future.”