Car exports set a new record in 2016, but it was a rocky road for new car sales domestically and competition for sales is now fierce.
South Africa has an entrenched driving culture history. An innate love of cars combined with mobility necessity and the uplift in status that car ownership provides has historically put new car sales pretty much in the fast lane.
But the new car market has hit a rocky road in recent years, with the motor industry being challenged on multiple fronts. These include currency weakness, high interest rates, petrol price hikes, changing mobility habits and a rise in used car sales. Even those who own cars are hanging on to them longer. The economic downturn together with affordability constraints has meant an uphill struggle for new car sales domestically, the downward trend continuing throughout 2016. Competition for sales on local soil is now fierce, with cash incentives and innovative financing options now featuring more prominently.
Sluggish domestic market
New car sales in SA have been on the decline since 2014 and 2016 was no different. Despite a strong 16.3% contribution by the car rental sector, it was an annus horribilis for the new car market, which recorded an 11.4% drop in sales compared to 2015, reports the National Association of Automobile Manufacturers of South Africa (Naamsa).
The drop is most significant in the consumer driven passenger car sector, unsurprising perhaps given biting economic conditions and affordability thresholds. Despite attractive cash incentives, the segment continued to feel the pinch in December, declining 14% month-on-month, and posting an overall drop of 12.4% for 2016.
Despite an increase of around 14% in new car prices during the year, preliminary estimates suggest sales turnover in 2016 declined around 2% to R233bn for domestic sales of new vehicles, reports Naamsa.
Affordability driving consumers to the used car market
هذه القصة مأخوذة من طبعة 26 January 2017 من Finweek English.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة 26 January 2017 من Finweek English.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
