Figures released yesterday revealed that new car sales improved last month by 7.9percent to 35316 units from the 32722 cars sold in October last year. Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa (Naamsa), said the car rental industry had accounted for an estimated 26.1percent of new car sales registered last month.
Sales of new light commercial vehicles, bakkies and minibuses declined last month by 1.7percent to 13376 units from the 13603 sold in October last year, while medium commercial vehicle sales dropped year-on-year by 3.2 percent to 668 units and heavy truck and bus sales by 5.1 percent to 1677 units. Vermeulen said the medium and heavy commercial vehicle sales figures continued to reflect generally poor investment sentiment in the economy.
Azar Jammine, the chief economist at Econometrix, said tourism was proving to be a strong driver of some parts of the economy, including the new vehicle market.
“You can’t see it in isolation or ignore that,” he said. Jammine believed the strength of the car market could also be partly attributed to pre-emptive buying because of the depreciation in the value of the rand.
He added the new vehicle sales were “encouraging” given the political and economic headwinds in the country. Jammine said fixed investment was “taking a knock”, which was evident from the sales of medium and heavy commercial vehicles, but this was merely a slowdown in sales and not a collapse.
He believed the strength of new vehicle sales despite the political and economic headwinds resulted from the vehicle replacement that was in place.
Jammine said there was a dramatic falloff in the purchase of vehicles during the global financial crisis in 2008 and 2009 with the market recovering before dropping badly between 2013 and 2015.
Isaac Matshego, an economist at Nedbank, said new vehicle sales last month continued to show signs of improvement, increasing for the fifth month in succession, the longest run of growth since the second half of 2014.
Matshego said the vehicle market was likely to show further signs of rebound off a low base over the coming months but growth was unlikely to rise strongly because household income growth remained subdued and debt levels elevated. He said although vehicle sales figures continued to rebound off a low base, the numbers still did not indicate a strong upturn and were unlikely to have policy consequences.
Vermeulen said the impact of the Medium Term Budget Policy Statement and the subsequent sharply lower exchange rate came too late last month to affect the sales figures. However, Vermeulen said an overall year-on-year improvement of about 1.5percent in new vehicles sales for this year remained possible.
Export sales of locally produced vehicles dropped last month by 8.3percent to 28229 vehicles from the 30773 vehicles exported last October. Vermeulen said new vehicle exports were negatively affected byffected by the impact of the recent massive storm on Durban Port operations and on production volumes at Toyota’s plant in Prospecton in Durban.
- BUSINESS REPORT