The crisis engulfing the local motor industry deepened yesterday with an acceleration in the already sharp decline in new vehicle sales volumes.
The trend is likely to wipe out more marginal dealerships and lead to consolidation among suppliers, while more brands may leave the country.
Figures released yesterday by the National Association of Automobile Manufacturers of SA (Naamsa) showed new vehicle sales had slumped by a massive 35.4 percent to 30 503 units last month, from 47 215 in January last year - the worst new vehicle sales figure for January in eight years.
Nico Vermeulen, Naamsa's executive director, said it was clear all sectors of the industry were experiencing an unprecedented and severe deterioration in operating conditions. The entire automotive value chain was confronted with a crisis in cash flow and viability.
Sales of new cars fell to 20 601 units last month, down 32.2 percent year on year.
Sales of new light commercial vehicles, bakkies and minibuses plummeted 41 percent to 8 354 units; medium commercial vehicle sales crashed 46 percent to 595 units; and heavy truck and bus sales declined almost 36 percent to 953 units.
Tony Twine, a motor industry analyst and the director of Econometrix, said the figures were worse than expected.
Marcel de Klerk, the managing executive of Absa Vehicle and Asset Finance, said the slowdown in the new vehicle market was growing. He did not believe there would be an improvement this year because of the slowing economic growth, the increased risk of job losses, high consumer debt and low consumer confidence.
De Klerk expressed concern about the future of vehicle suppliers due to low profitability and poor liquidity. "There will be a shakeout and it will be more dramatic than what we saw in 2008." He believed there would be a consolidation of vehicle suppliers, more dealership closures, brand takeovers and brand disappearances.
He said that between 30 percent and 40 percent of the dealers to which Absa provided floor plan finance facilities were taking financial strain. No bank was approving more than 30 percent of the finance applications it received, which was down from nearly 50 percent previously. - Roy Cokayne