Consumer confidence supports new car sales

IMPROVED new vehicle affordability and stronger sales to the vehicle rental industry contributed towards a 4.3 percent increase in new car sales last month to 32 108 units from the 30 785 units in July last year.

Nico Vermeulen, the director of the National Association of Automobile Manufacturers of South Africa (Naamsa), said yesterday that the improvement in domestic sales, specifically new car sales, was encouraging against the background of recent weak economic growth numbers.

Vermeulen said that on the back of continued fleeting replenishment, the car rental industry had contributed an estimated 18.8 percent of new car sales during the month.

“The new car market continued to be supported by steady consumer confidence and improved new vehicle affordability with average price increases of new cars remaining well below inflation for the fourth consecutive quarter,” he said.

TransUnion South Africa reported this week that the rate of increase in new vehicle prices dropped to 2.6 percent in the second quarter from 5.4 percent in the same quarter last year and, after taking into account the impact of inflation, new and used vehicles were getting cheaper. Figures released yesterday revealed that sales of new light commercial vehicles, bakkies and minibuses declined last month by 2.3 percent year-on-year to 13 458 units, while medium commercial vehicle sales improved by 15.9 percent to 701 units, and heavy truck and bus sales by 6.7 percent to 1 614 units.

Encouraging

Azar Jammine, the chief economist at Econometrics, said the new car and truck sales were encouraging.

Jammine said these sales figures confirmed what came out more generally in the Reserve Bank’s leading indicator last week.

“The message is that the economy leaves much to be desired, but you are not seeing a total collapse.

“A lot of that is due to the fact that globally you are still seeing quite a bit of economic activity.

“People are worried about the trade war, but somehow people are also not reacting unduly negatively at present,” he said.

Jammine said that the improvement in sales to the vehicle rental industry, which had been weak for some time, had also helped to lift sales.

He believed that there would be marginal growth in new vehicle sales this year. However, Naamsa reported that vehicle export sales had again disappointed.

Total vehicle export sales slumped last month by 19.2 percent to 28 063 units from the 34 720 vehicles exported in July last year.

Vermeulen said the latest lower than expected vehicle export sales numbers would necessitate a downward revision of industry export projections for this year.

“A further complicating factor was the increased risk of global trade disputes, which could impact generally on international trade flows, including vehicle exports,” he said.

However, Vermeulen said domestic sales were on target to show marginal growth this year, but export sales would probably remain under pressure.