Guiding consumers since 2009

Car dealers face closure as retail sales take a dive

By Staff Writer

Business Report

October 24, 2007

Eric Scoble, the chairman of the National Automobile Dealers' Association, said yesterday that sales figures from the National Association of Automobile Manufacturers of SA (Naamsa) created a misleading picture of market conditions.

Scoble said dealer passenger vehicle sales reported to Naamsa last month were the worst since December 2004, comprising only 23 000 units out of a total market of 32 257 passenger vehicles reported.

The figure was 19.9 percent lower than in September 2005 and 20.1 percent lower than September last year.

Scoble said the non-dealer market, comprising sales to car rental companies, fleets and the government, along with manufacturers' internal fleets, had concealed the true dealer picture.

Barloworld Motor chief executive Martin Laubscher and McCarthy Motor Holdings chairman Brand Pretorius believe Naamsa should publish a breakdown of new vehicle sales in future.

Laubscher said: "The evil of pre-reporting must be rooted out." Pre-reporting involves reporting sales when the vehicles are still in the dealer's stock so dealers can qualify for manufacturers' sales incentives.

Tony Twine, a motor industry analyst and director of Econometrix, said the picture created by Naamsa's sales figures was accurate and reflected the total market.

Nico Vermeulen, Naamsa's executive director, said that in principle, Naamsa did not have any problem in releasing a breakdown of sales for public consumption. It was opposed to pre-reporting, had strict reporting guidelines and had been speaking to the Road Traffic Management Organisation about getting access to new and used vehicle registration statistics to reconcile vehicle sales with reported sales.


Scoble said the quarterly performance of the passenger car market indicated the real and sudden downturn following the three interest rate hikes this year. The market declined 3.66 percent from a year earlier in the first quarter, 15.48 percent in the second and 17.58 percent in the third.

Twine said passenger vehicle sales were a barometer of consumer durable demand, which grew 3 percent year on year in the second quarter, compared with about 20 percent a year earlier. "We still find credit growing in value terms by over 20 percent both year-on-year and on a month-on-month annualised basis. Most of the borrowing seems to be happening in the formal mortgage bond market but that can be a smokescreen for spending on almost anything," he said.

Pretorius said lower sales were hurting dealer viability. Dealers needed volume throughput because of high overhead costs, and investment in facilities and upgrades.

"The less popular franchise dealer networks are battling. Should the trend continue for another six to nine months, a degree of dealer rationalisation will happen. It's already happening in the used car market.''

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