The local motor industry saw it its highest decline for 2015 this September. According to the latest data from the National Association of Automobile Manufacturers of South Africa (Naamsa) total industry sales declined 9%, year-on-year, with 50 251 new vehicles sold last month.

Passenger cars accounted for 33 035 sales, year-on-year, representing a 13,2% decline. Light Commercial Vehicle (LCV) sales remained steady, with year-on-year growth of 0,3%. This performance is attributed to stiff competition and attractive marketing incentives in this segment. Sales for the rest of the commercial vehicle segment grew 5,5%, year-on-year, driven strong demand for extra-heavy commercial vehicles.

Sales into the rental channel declined 20,9%, year-on-year. This was heavily influenced by a sharp decline in tourism as well as aggressive competition from disruptive players in this space.

“Although interest rates remained unchanged last month many factors contributed to the decline in sales,“ says Simphiwe Nghona, CEO of WesBank’s motor division. “We had two fewer working days, continued depreciation of the rand and a general negative sentiment among both consumers and businesses.”

Despite the decline in sales, WesBank’s data shows that demand for vehicle finance was at an all-time high. A record number of vehicle finance applications were received, with total application volumes growing 6,7%, year-on-year. Used vehicle application volumes grew 2,4%, while demand for new vehicle finance was up 15,6%. This healthy demand for new vehicle finance is attributed to an end-of-quarter sales drive, with manufacturers offering consumers attractive incentives.

However, high levels of household debt and deteriorating credit profiles have impacted consumers’ ability to afford new debt.

“The declining new vehicle sales market is responsible for hyper competition between vehicle manufacturers, leading to very aggressive marketing activity – to the benefit of consumers,” says Nghona. “While those buyers can use this to their benefit, they should keep the current economic climate in mind and carefully consider any vehicle purchase to avoid over-extending their credit positions.”