(Reuters) – South Africa’s total new vehicle sales fell by 19.5 percent year-on-year in September, industry data showed on Friday, showing continued pressure on households, although the rate of contraction eased.
The automotive industry, one of the biggest in the country’s manufacturing sector and a key employer, has been in decline for more than two years, knocked by a weak economy and a global downturn that has slashed demand for exports.
But recent data shows some respite for the sector, with the rate of decline in sales compared to previous months beginning to brake after a series of interest rate cuts this year.
The National Association of Automobile Manufacturers (NAAMSA) said total industry sales dropped to 35,931 vehicles last month compared with 44,628 a year ago. Sales were up on the previous month, though.
When stripping out sales from Associated Motor Holdings and Amalgamated Automobile Distributors — which report separately — sales fell by 22.4 percent to 31,726 units compared with September last year, it said.
Those sales were also up on August and the rate of contraction was the slowest in a year — well down on the more than 40 percent decline of earlier this year — suggesting the sector has come through the worst of the cycle.
NAAMSA said total passenger car sales were down only 15.8 percent compared to September last year.
“This represented an improved performance in relation to previous months. Encouragingly, the selling rate of total new cars per day during September, 2009 had improved for the second consecutive month,” it said.
A string of interest rate cuts, which have reduced the central bank’s repo rate by 5 percentage points to 7 percent since December, are expected to ease pressure on households, although soft credit demand growth in August suggests consumers are not racing to take on more debt.
The vehicle sales numbers and a surprising jump in manufacturing activity data, released on Thursday, may prompt the Reserve Bank to hold off on any more rate cuts, particularly while inflation remains above the 3 to 6 percent target band.
NAAMSA said sales for the year so far were down 30.3 percent at 294,481 vehicles, adding that the impact of the global economic crisis was clearly evident in the collapse in exports.
Exports were down 49.3 percent year-on-year in September at 13,974 vehicles.
No significant improvement in export sales was anticipated in the short to medium term,” NAAMSA said.
NAAMSA said until the global and domestic economic recovery gains traction, local sales and exports were likely to remain subdued.
“The domestic operating environment would remain difficult in the short to medium term and any improvement would depend on a revival in consumer spending and lower interest rates,” it said.