Figures released yesterday revealed that car sales slumped by 4266 units last month to 32642 units from the 36908 cars sold in January last year.
Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa (Naamsa), said the car rental industry had continued to make a major contribution and accounted for about 23.1percent of new car sales last month, which meant more than one in every five new cars sold during the month represented a car rental sale.
Overall sales of new vehicles last month dropped by 8.9percent to 45888 units from the 50386 units sold in January last year. Sales of new light commercial vehicles, bakkies and mini buses declined last month by 2.1percent year-on-year to 11689 units and medium commercial vehicles by 6.1percent to 443 units, while heavy truck and bus sales increased by 4.5percent to 1114 units.
Export sales of new vehicles improved last month by 22percent to 14212 units from the 11651 vehicles exported in January last year. Azar Jammine, the chief economist at Econometrix, said new vehicles sales last month were much weaker than expected, but attributed this weakness to the extremely strong growth in sales in November.
“The rand bombed out in November and I think that encouraged a lot of pre-emptive buying ahead of any price increases and left little for spending later on,” he said.
Jammine added that if the value of the rand stayed where it currently was, it would result in lower rates of increase in car prices, which would boost sales.
Kamilla Kaplan, an economist at Investec, said Naamsa anticipated a further modest improvement in domestic new vehicle sales to 2.6percent year-on-year this year from 1.8percent last year.
Kaplan said the expected new vehicle sales performance would be consistent with the projected lift in GDP growth this year to above 1percent on the anticipated strengthening in business and consumer confidence post the December ANC elective conference.
She added that in addition to this confidence effect, consumption expenditure growth was expected to lift slightly with inflation expected to recede this year, lending some support to household finances.
Should the strength in the value of the rand be sustained, it would also serve to stem new vehicle price inflation, which would enhance affordability, she said. However, Kaplan said these effects would be partially countered by tax increases, should they materialise, in the 2018 Budget.
“Moreover, for as long as consumer credit supply conditions remain tight a particularly robust rebound in passenger vehicle sales would be unlikely,” she said.
Vermeulen said the finalisation of the Post 2020 Automotive Policy Regime, which would replace the current Automotive Production Development Programme, was at an advanced stage.
- BUSINESS REPORT