The resilience of the new vehicle market in recent months was surprisingly transformed into strength in September to confirm there was still life in the domestic economy.
Driven by near record sales to the vehicle rental industry, which accounted for 23.5 percent of all new cars sold last month, vehicle sales rose by 11.5 percent to 60 854 units from the 54 571 units sold in September last year.
Vehicle export sales rebounded strongly to 30 778 units, an improvement of 258 percent on the strike-ravaged industry total of 8 598 vehicles exported in September 2013.
Azar Jammine, the chief economist at Econometrix, said yesterday that the good performance by the new vehicle market last month went hand in hand with a number of recent indicators that showed there had been a pickup in business activity in the past two months, including the Reserve Bank’s leading indicator, this week’s trade figures and the latest manufacturing sector activity data.
However, he emphasised last month’s sales figures were being compared to a low base because there had been a strike in the automotive industry in September last year. But he said the sales figures reinforced the view that downward reviews to economic growth had been exhausted and the economy could achieve the 1.5 percent growth that many commentators believed was still too optimistic.
Jammine said the sales figures suggested that now the strike in the steel and engineering sector was over, “the economy is not down and out and not in a recession. They also suggest that some of the gloomier pictures painted have exaggerated the parlous state of the economy.”
Kamilla Kaplan, an economist at Investec, said the magnitude of the growth in new vehicle sales could be partly ascribed to statistical base effects because vehicle sales contracted in virtually every month of the past year.
Discounting the influence of statistical base effects, the underlying growth trajectory in domestic vehicle sales remained relatively moderate, she said.
Figures released yesterday revealed that new passenger car sales grew last month by 7.5 percent to 42 918 units compared with September last year.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of SA, said last month was the first time this year that new car sales had registered year-on-year growth.
He attributed the improvement to a combination of factors, including attractive incentive packages, general pre- emptive buying in anticipation of further new vehicle price increases because of a weakening rand, relatively strong corporate purchases, replacement demand and the strong contribution by the car rental sector.
Marc Corcoran, the president of the Southern African Vehicle Rental and Leasing Association, said the strong growth in sales to the vehicle rental industry was driven by a combination of factors, including the timing of vehicle purchases by rental companies to optimise efficiencies, growth in inbound tourism and purchasing ahead of vehicle price rises.
He stressed the growth did not indicate a boom and the retail motor sector was taking strain, as shown by the 1.6 used vehicles being sold for every new vehicle sold this year compared with 1.2 used vehicles for every new vehicle in 2013.
Nicholas Nkosi, the head of vehicle asset finance in personal markets at Standard Bank, had expected an improvement in sales, but he was surprised at the extent of the market’s strength. “It’s encouraging with the different categories looking positive.”
He said the growth was possibly reflective of “a sense of denialism about the reality” in the economy. “People might be tired of bad news and are now replacing their car regardless of interest rates.”