Vehicle sales slump…is there more to the story?

Yesterday it was reported that new vehicle sales slumped lower than the same period last year – indicating that high interest rates, increasing vehicle prices, astronomical fuel prices the National Credit Act are all making it very difficult to afford a new car.

The report on News24 said that new vehicle sales dropped from 51,628 units to 39,533 units – representing a 23.4% decrease in new vehicle sales.

What is astonishing, though, is that close to 40,000 new vehicles are STILL being sold every month, which is a lot of vehicles, despite a looming crisis in the industry.

But the problem could be much worse than it really is.  South Africans are notoriously bad drivers – rated amongst the worst in the world.  As a result, thousands of accidents happen on a monthly basis in this country and as a result thousands of cars are written off and replaced as insurance claims. This also goes for vehicle thefts.

It would be interesting to see what percentage of new vehicle sales are actually as a result of insurance claims and then deduct that percentage from the total number sold per month.

It’s almost guaranteed that it will paint an even bleaker picture of the local new vehicle market because it will show that people are not buying as many new cars – either as a replacement for an older car or as a first vehicle – and that factors other than consumer demand are keeping certain industries afloat.

I may be totally off the mark here but perhaps the question has to be asked.