NEW VEHICLE SALES
Car sales show a remarkable resilience
NEW CAR sales were surprisingly resilient last month, declining by only 2.5 percent to 26 317 units, compared to the 26 980 cars sold in May last year.
Sales of new light commercial vehicles, bakkies and mini buses dropped by 1.5 percent to 13 410 from 13 620 in the same period.
Azar Jammine, the chief economist at Econometrix, said yesterday that new car sales were amazingly good and indicated the economy was not as weak as was expected.
Jammine said the stronger than expected new vehicle sales also coincided with the improvement in business conditions indicated by the increase in the purchasing managers index last month.
He said the performance of new vehicle sales last month also fitted into the narrative that the economy was bottoming out and inflation falling more than expected, an absence of interest rate hikes and an improvement in consumer credit health.
“Vehicle sales figures have already taken a huge knock and they change in line with the rate of change in the economy. The economy is weak, but the rate of change is improving,” he said.
Kamilla Kaplan, an economist at Investec, said the decrease in new vehicle sales in the first five months of this
‘Vehicle sales figures have already taken a huge knock and they change in line with the rate of change in the economy.’
year amounted to 1.7 percent year-on-year and extended the 11.4 percent contraction last year. Kaplan said low statistical base factors could see the yearon-year sales outcomes improve going forward following three consecutive years of contractions.
However, Kaplan said that the underlying performance in the new vehicle sector was expected to remain relatively subdued in line with only a modest expected recovery in gross domestic product growth of about 0.8 percent this year from 0.3 percent year-on-year last year.
Sales of medium commercial vehicles dropped last month by 13.6 percent yearon-year to 583 units and heavy truck and buses by 10 percent to 1 473 units. Exports of locally produced vehicles declined last month by 12 percent to 29 596 units from the 33 619 units exported in May last year.
Nico Vermeulen, a director of the National Association of Automobile Manufacturers of South Africa (Naamsa), said the fairly substantial year-on-year decline in new vehicle exports should be seen in the context of the fact that vehicle exports in May last year represented the second highest export number on record.
Vermeulen said that following the modest improvement in new vehicle sales during the first three months of this year, the outlook for the balance of the year was somewhat uncertain. “The current polarised political environment in South Africa, together with prospects of subdued economic growth over the short to medium term, continued to weigh on business confidence and consumer sentiment,” he said.
Rudolf Mahoney, the head of brand and communications for WesBank, said overall sales declined, despite there being four more working days last month than in April and one more working day than in May last year.
Mahoney said they could only attribute this decline to uncertainty among buyers.
Two indicators of this uncertainty among consumers in WesBank’s data were yearon-year increases for average deal duration in both the new and used market, which showed that consumers were hesitant to replace their vehicles, and the increase in consumers choosing to manage risk by opting for fixed interest rates.
“Data from WesBank shows a 19 percent increase in demand for fixed interest since South Africa’s economy was downgraded to junk status,” he said.
There was a modest improvement in new vehicle sales during the first three months of this year, Naamsa says.