::Barloworld ::New vehicle sales – no recovery just yet
New vehicle sales soared to over 700 000 in 2007. Analysts were optimistic that the local market would top the magic million figure within a few years. Of course, all things staying the same, we might have. Only, things did not stay the same. The National Credit Act happened. Oil prices spiked. Interest rates went up. Then the whole world economy went into freefall. In turn, car prices started to rise.
Neither is it over yet. If projections are to be believed, relief is at least six months away. In the meantime, it might get worse before it gets better. Most agree that meaningful recovery will only be noticeable towards the end of the year. Certainly, interest rates have started to creep down ever so slowly, but a lot more is necessary before the consumer will get his confidence back. New vehicle sales in 2009 might turn out to be even worse than in 2008.
Consumer preferences have shifted in line with economic sentiments – SUVs, that were once the cash cows, are selling rather poorly now. Cue the mini SUV and its rise to fame. And of course, crossover vehicles. Both of these offer a soft landing for would-be SUV buyers, offering some of the same features, but at reduced cost and on far less fuel.
The small car is selling as well as ever, and better, despite the times. Rather, because of the times, because expensive gas-guzzlers have become politically incorrect. This is not to say that large car ownership has to be frowned upon or that their new vehicle sales is going to become non-existant.. Rather, the approach is different. That large executive car can be had in diesel, and the diesels at that end of the market are both quiet and civilised, while their immensely torquey brand of power delivery endears them to their owner, while soothing their conscience with decent fuel consumption.
New vehicle sales will recover, as always, because economics work in cycles and history repeats itself. But for now, we will have to grit our teeth and wait out the storm.
