Month of holidays puts the brake on vehicle sales
Lihle Z Mtshali
Lihle Z Mtshali
The four public holidays in April would have slowed traffic to car showrooms to a crawl last month, data being released tomorrow is expected to show.
When the National Association of Automobile Manufacturers releases April's new vehicle sales figures, analysts expect sales to be even more dismal than the 30.3percent year-on-year drop seen in March.
Standard Bank economists Shireen Darmalingam and Danelee van Dyk said sales in April were expected to have taken a turn for the worse.
"...The number of selling days has been dramatically reduced by the number of public holidays in April to only 21. And, the timing of several of these holidays has provided scope for short holiday breakaways, clearly stealing more time away from showroom floors," they said.
Brand Pretorius, executive chairman of McCarthy Motor Holdings, agreed. He said sales numbers would have been very disappointing April because the holidays had "limited the number of trading days".
"On a normal month we have 24 to 25 trading days," he said.
The election also disrupted matters, Pretorius said.
"April is not a good month because of school holidays and Easter, but the elections created some uncertainty and the run-up to the elections undermined the propensity to buy," he said.
Another reason for the gloomy figures would have been the April 1 price increase in vehicle sales, which meant a lot of pre-price increase buying in March.
"Bank's lending practices are, for understandable reasons, still quite tight," said Pretorius.
While in the past 50 to 55percent of credit applications would have been approved, the approval rate now was much closer to 25percent, said Pretorius.
Income and job security also remain high on the list of consumers' concerns who might be considering the purchase of a new vehicle.
"While the generous 2.5percentage points' reduction in interest rates would improve vehicle affordability, consumers are expected to remain averse to new debt obligations, given the general anxiety surrounding income and job security," said the Standard Bank economists.
They expect sales to have contracted by 34percent year-on-year in April.