Pretoria - New vehicle sales last month showed signs that the economy was turning around, despite the decline in sales.
Azar Jammine, chief economist at Econometrix, said on Wednesday that the 4 percent decline in new car sales in February was not unexpected after the strong sales achieved in January.
Jammine said it was an improvement on the rate of decline at the end of last year.
“It supports the view of a gradual bottoming out in the car market. Impressive sales were achieved for light commercial vehicles and heavy commercial vehicles. It does appear there is a bit of movement and indicates there is a bottoming out and turnaround in the economy.
“The Reserve Bank’s leading indicator released last week was very strong, as was the PMI [Purchasing Managers’ Index], which points to better times in the economy in 2017,” he said.
Sales of new cars last month dropped by 4.4 percent to 31 400 units from the 32 854 sold in February last year.
Nico Vermeulen, director of the National Association of Automobile Manufacturers of South Africa, said the car-rental industry had again made a strong contribution, accounting for 19.1 percent of new car sales last month, which understated its share, because it excluded BMW and Mercedes-Benz car-rental sales.
In January, the car-rental industry accounted for 31.8 percent of new car sales.
Jammine expressed concern about the impact of increased taxes, the new higher marginal tax bracket and the increase in the dividends tax on the sale of higher-priced cars.
“Overall vehicle sales will not be that hard hit by the tax increase, but it will result in a buying downtrend in the market by people finding it impossible to afford the more expensive cars,” he said.
Unchanged
Sales of new light commercial vehicles, bakkies and minibuses increased last month by 9.7 percent year-on-year to 14 416 units, medium commercial vehicles by 8.5 percent to 705 units and heavy trucks and buses by 6.1 percent to 1 592 units.
Export sales were virtually unchanged from last year, rising last month by 0.2 percent to 29 378 vehicles from the 29323 exported in February last year.
Read also: Vehicle manufacturers say another difficult year lies ahead
Nicholas Nkosi, the head of Standard Bank Vehicle and Asset Finance, Retail & Business Banking, said despite new passenger vehicles sales remaining under pressure in the short to medium term, commercial vehicles sales were showing good signs of recovery, which was a promising sign for the economy.
“Export sales have had a slow start, with less than a percentage growth year-on-year. This is likely to improve in the medium term,” he said.
Rudolf Mahoney, the head of brand and communications at WesBank, said the growth in the rental and commercial vehicle segments was indicative of these businesses entering their replacement cycles and acquiring new assets to refresh their fleets.
But Mahoney said passenger car sales were still struggling.
With household budgets remaining under pressure, consumers were holding on to their cars for longer, he said.
Mahoney said WesBank’s internal data reflected the trends seen in the consumer space, which saw demand for new vehicles dropping last month by 8.4 percent year-on-year and demand for used vehicles also slowing, with 5.3 percent fewer applications received compared with February last year.
He said the average deal value for a new car was 8.8 percent higher, and the average car was 9 percent more expensive year-on-year.
Mahoney said WesBank also saw a decline in the demand for used vehicles, although it continued to outpace new vehicles by a factor of 2.4:1.