Political developments could help to boost new car sales

Commenting on the new vehicle sales statistics for January 2018 Naamsa said that domestic new vehicle sales had started the year on a weak note with aggregate domestic sales at 45 888 units declining by 4 498 units or 8.9% from the 50 386 vehicles sold in January last year.

Brian Joss – In contrast, January, 2018 export sales at 14 212 vehicles had registered a substantial improvement of 2 561 units or a gain of 22.0% compared to the 11 651 vehicles exported in January last year. Overall, out of the total reported Industry sales of 45 888 vehicles, an estimated 35 824 units or 78.1% represented dealer sales, an estimated 17.3% represented sales to the vehicle rental Industry, 2.7% to industry corporate fleets and 1.9% to government. The January, 2018 new car market reflected downward momentum and at 32 642 had registered a fall of 4 266 cars or a decline of 11.6% compared to the 36 908 new cars sold in January last year. The car rental Industry had continued to make a major contribution accounting for about 23.1% of new car sales in January, 2018 – meaning that more than one in every five new cars sold during the month represented a car rental sale. Domestic sales of new light commercial vehicles, bakkies and mini buses at 11 689 units during January, 2018 reflected a fall of 251 vehicles or a decline of 2.1% compared to the 11 940 light commercial vehicles sold during the corresponding month last year. Sales in the low volume medium and heavy truck segments of the Industry reflected a mixed performance and at 443 units and 1 114 units, respectively, had recorded a fall of 29 vehicles or a decline of 6.1% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, an improvement of 48 vehicles or a gain of 4.5% compared to the corresponding month last year. The figures continued to reflect subdued investment sentiment in the economy. Ongoing improvement in the Reserve Bank’s leading indicator and the substantial increase in the latest
Purchasing Manager’s Index, anticipate enhanced economic conditions over the medium term. The considerable appreciation in the value of the Rand will reduce inflationary pressures and serve to enhance consumers’ disposable income.

The new Volkswagen Polo. Picture: Quickpic

Combined with the recent positive political developments and improved business confidence, it is possible for economic growth in 2018 to surpass current expectations. However, much will depend on the February 2018 budget and governments’ commitment to disciplined fiscal management and limiting
government expenditure as well as ensuring State Owned Enterprises are subjected to strict governance and operate according to sound business principles. On the assumption that South Africa will avoid a further downgrade during the first quarter of 2018, NAAMSA anticipates that economic growth could recover to a level above 1.5% in 2018. This would benefit new vehicle sales in particular which could then expand to levels above the 2% to 4% growth projected at the beginning of this year.

New vehicle price inflation, assisted by the stronger Rand, was currently at an annualised rate of around 2.5%, well below the inflation rate, and this, together with continued replacement demand, would serve to support new vehicle sales in the months ahead. New vehicle exports in 2018 were expected to show fairly strong upward momentum on the back of improved growth in the global economy. At this stage, an increase of about 11% to a total of 366 050 export sales was anticipated for the year. The finalisation of the Post 2020 Automotive Policy Regime, which will replace the current Automotive Production Development Programme, is at an advanced stage. Discussions and negotiations between the industry and the Department of Trade and Industry on certain aspects of the new programme are continuing and these are expected to be concluded in the next month or two. The industry endorses governments’ commitment to provide long term policy certainty for multi-national

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