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Motor industry faces some bleak months ahead

A downward correction in new vehicle sales with some months of negative year-on-year sales growth is on the cards, according to AltX-listed RGT Smart Market Intelligence.Paul de Vantier, the chief executive of the business intelligence and decision support company born out of the automotive sector, said last week that growth would taper off.De Vantier forecast growth in sales of about 6 percent for this year. He said the motor industry had just been powering on but there had to be a slowdown.But De Vantier said the new vehicle market would still end the year up on last year by about 6 percent to 7 percent.

Motor vehicle offices face fixing thousands of records
, De Vantier said, including the improved appetite by banks for credit and the reduction in car prices in real terms over the past few years, which had caused a swing from the used to the new vehicle market.Total new vehicle sales reported to the National Association of Automobile Manufacturers of SA Naamsa including sales by Associated Motor Holdings that are not reported in detail, grew 6.38 percent to 242 455 units in the five months to May this year from 227 898 in the same period last year.New passenger car sales have performed better than the overall market, rising year to date by 8.68 percent year on year to 171 044 units.

De Vantier said the uncertainty about the prospects for the market was placing industry players, particularly importers, at significant risk.The vast majority of cars sold in South Africa are imported, which means supply chains are long. Importers need to make decisions based on what they believe they are going to sell in six months time.

In the current climate, they face the very real risk of shipping in large quantities of vehicles or components that may not sell if the car market in South Africa turns negative.De Vantier said imported vehicles accounted for about 75 percent of total vehicle sales in the country.In May RGT Smart reported an almost 17 percent increase in revenue to R34.4 million in the year to February, with headline earnings almost 29 percent higher and the group generating R5.2m cash from operations during this period.De Vantier said RGT Smart was also experiencing a significant increase in interest for information and data among local companies looking to expand into Africa.

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