Strong demand from car rental companies helped to maintain the forward momentum in new vehicle sales last month with new car sales growing by 11.5 percent year on year to 40 345 units in August.
Nico Vermeulen, the executive director of the National Association of Automobile Manufacturers of SA (Naamsa), said year-to-date new car sales were 12.5 percent higher than during the corresponding eight months last year, while the daily selling rate last month remained close to five-year high levels.
Mike Glendinning, the sales and marketing director at Volkswagen South Africa, said an average of 1 566 new cars were sold a day last month and this was largely supported by seasonally strong sales to rental car companies.
Glendinning said a similar daily sales rate was only previously achieved at the peak of the last boom in the new car market in 2006.
Isaac Matshego, an economist at Nedbank’s group economic unit, said the rate of growth in new vehicle sales would be capped by a generally weaker economy, with sales of passenger vehicles likely to be contained by still high inflation, weak consumer confidence and uncertain job prospects in some industries.
Vermeulen said the new car market, for the second consecutive month, had been supported by strong demand from car rental companies, which accounted for 15.2 percent of total new vehicle sales.
He added that the contribution by car rental companies was expected to remain high over the next few months as the car rental industry continued to re-fleet.
Vermeulen said despite prospects of a lower economic growth environment, the automotive sector continued to perform remarkably well.
A number of factors would continue to support domestic sales, he said.
These included historically low interest rates, the ongoing improvement in vehicle affordability in real terms, improving demand for credit by households and businesses, the recent 0.5 percentage point reduction in interest rates and the highly competitive trading environment, attractive incentives and new model introductions.
Figures released by Naamsa revealed that sales of new light commercial vehicles, bakkies and minibuses increased last month by 5.7 percent to 13 637 units from the 12 906 unit sales in August last year.
Sales of medium commercial vehicles increased by an estimated 11.8 percent year on year to 815 units last month and heavy truck and bus sales by 8 percent to 1 456 units.
Wessel Steffens, the head of Absa Vehicle and Commercial Asset Finance, said more than 2 million cars were sold in the past five years and replacement demand was “coming through strongly now” with the level of sales growth also complemented by the launch of new models and the affordability of new vehicles.
Steffans said new vehicle sales this year were likely to be in the upper range the forecast it made at the beginning of this year of growth of between 7 percent and 10 percent for this year, 9.6 percent next year and 9.8 percent in 2014.
With these growth predictions, the new vehicle industry was moving back towards the record of more than 700 000 units sold in 2006, which was indicative of a healthy industry for all participants.
Chris De Kock, the executive head of sales and marketing at WesBank, said the growth in new vehicle sales had been very strong so far this year but was now showing signs of slowing down because the base effect of the strong growth achieved last year was starting to come through in the numbers.
“While growth is still strong, we do expect this to moderate in the coming months,” he said.