New vehicle sales remained surprisingly resilient last month despite the disruption caused by the steel and engineering sector strike, slower economic growth, rising inflationary pressures and a further increase in interest rates.
However, the National Association of Automobile Manufacturers of SA (Naamsa) said vehicle export sales had been dented by the metalworkers’ strike and slumped by 16.1 percent to 22 773 units from the 27 137 units exported in July last year.
Total new vehicle sales fell last month by 1.5 percent to 57 670 units from the 58 561 units sold in July last year.
New passenger car sales declined by 1 percent to 39 945 units from the 40 363 units sold last July while new light commercial vehicles, bakkies and minibus sales dropped by 2 percent to 15 081 units from 15 393 units in the same period.
Sales of medium commercial vehicles dropped by 13 percent year on year to 856 units last month and heavy commercial vehicles and buses by 1.8 percent to 1 788 units.
Azar Jammine, the chief economist at Econometrix, said car sales last month had been “amazingly solid” and were indicative that manufacturers had stocked up ahead of the strike to enable them to continue supplying the market.
Jammine believed vehicle exports were more affected than the domestic market because manufacturers in the past had chosen to supply local customers ahead of foreign markets.
Isaac Matshego, an economist at Nedbank, said the new vehicle sales figures were consistent with the credit demand data released last week that showed consumer demand, one of the main drivers of economic growth, remained subdued.
Nicholas Nkosi, the head of vehicle and asset finance personal markets at Standard Bank, said the group was pleasantly surprised by the sales figures because it had been anticipating a higher decline, largely because of the strike. But Nkosi said the sales figures were a reflection of where the South African economy was at at the moment, with consumers under huge pressure because of increases in interest rates and inflation, strikes and the general economic environment.
Nkosi anticipated a continuation of the trend towards a slower rate of growth in new vehicle sales for the remainder of the year but expected the export market to be the “shining star” of the market in the second half of the year.
Wessel Steffens, the head of Absa Vehicle and Asset Finance, said new vehicle sales were affected by a number of factors that were now trending negative, including vehicle prices, household finances, vehicle finance, transport costs and the performance of the economy and vehicle demand and supply.
Nico Vermeulen, the director of Naamsa, said the high incidence of industrial action experienced over the past year had proved severely damaging to the economy at a time when South Africa urgently required stronger growth, faster employment creation and a narrowing of the current account and fiscal deficits.
Vermeulen added that the outlook for the South African automotive sector for the balance of this year was of challenging market conditions.
“A domestic environment characterised by relatively low economic growth, rising interest rates and above-inflation new vehicle price increases will not be conducive to growth in new vehicle sales,” he said.
Naamsa expects a 5 percent full-year decline in new vehicle sales in the domestic market.