JOHANNESBURG - New vehicle sales rose 1.1percent last month to 49233 units, boosted by pre-emptive buying ahead of the 1 percentage point increase in VAT and other tax and duty increases.

The sales were the highest monthly total this year from 48698 vehicles sold in March last year as new vehicle emissions taxes and ad valorem duty changes also came into effect this month.

The maximum ad valorem excise duty rose from 25percent to 30percent but only increased the price of the most expensive vehicles, while the about 20percent increase in the CO2 vehicle emissions tax resulted in consumers paying about R1000 more on smaller-end cars and about R10000 more on bigger cars.

Sales of Bentley models increased 60percent to eight units from five units in February and Porsche by 55percent to 141 units from 91, but Maserati purchases rose by a single unit while Ferrari remained the same.

Azar Jammine, the chief economist at Econometrix, said the tax and duty increases had only a marginal effect on overall vehicle sales.

Jammine said the new vehicle market could also have been assisted by the cut in interest rates but believed it happened too late in the month to have any major impact.

He said consumers would be encouraged that the trend in interest rates was not upward right now, which would assist in preventing car sales from being terribly weak.

Jammine believed the positive factors outweighed the negative factors but the truck market was very weak and would not have been helped by the debate around expropriation without compensation, which was seen to be a damper on potential investment.

Sales of new cars improved last month by 3.7percent year-on-year to 32176 units from the 31032 cars sold in March last year.

Sales of new light commercial vehicles, bakkies and mini buses declined last month by 2.3percent year-on-year to 14701 units, medium commercial vehicle sales by 14.6percent to 722 units and heavy trucks and buses by 7.9percent to 1634 units.

Johannes Khosa, an economist at Nedbank, said the vehicle market was likely to improve this year and be supported by some improvement in consumer and business confidence on positive changes in the political environment as well as low debt service costs and inflation.

However, Khosa said the growth rate in vehicle sales would be contained by still-modest demand growth, subdued household income gains, higher taxes and the weak job market.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa, said the medium-term prospects for the South African economy had improved considerably on the back of the decision by credit ratings agency Moody’s to retain South Africa’s international and domestic credit rating at investment grade with a stable outlook and the reduction in interest rates.

Vermeulen said the continuing strength in the exchange rate should impact positively on new vehicle price inflation going forward.