September threads life-line of stability

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Image: Charlen Raymond

Sighs of relief could be heard across the motor industry as September sales steadied after a torrid August. While dealers could still be heard bleating amidst the decline, they must surely have been more positive about volumes on the showroom floor.

According to results released by the National Association of Automobile Manufacturers of South Africa (Naamsa), September sales slid only 0.9% year-on-year to 49 191 units, the biggest sales month of the year so far. Ghana Msibi, WesBank executive head of motor, says: “On the upside, there were 3,707 units more volume in the market during September than in August.”

Extending payment plans

The month was marked by three economic factors that could have contributed to the improvement. Consumer Price Inflation results announced during the month came within target at 4.3% albeit marginally up from July results, which were at a seven-month low; consequently interest rates remained unchanged although hopes for a further cut before the end of the year remain; and GDP numbers for the second quarter headlined growth of 3.1%, dodging recession and surely raising confidence.

Msibi adds: “WesBank’s own inflation data largely mirrors that of the general economy, our average deal size slightly above the South African number. This infers that new and used car price inflation falls within the general affordability challenge for cash-strapped South African households.

“Of greater concern is the need for South Africans to extend their car repayment contracts towards the maximum 72 months, while adding balloon payments to reduce the monthly installment amount. Consumers should remain cautious of over-extending themselves and should rather buy at a more affordable price than use other finance mechanisms to fall within budget.”

While September sales represented the largest volume month for the year so far, it was the second-best performing month year-on-year after April’s 0.7% increase. Year-to-date sales are 3.5% down on 2018.