Vehicle Sales update: New vehicle sales logged an annual decline in February to 3.8% y/y, albeit at a slower rate than January

21 Aug 2018

Annabel Bishop

Chief Economist

Figure 1: New vehicle sales volume growth
  • Domestic vehicle sales growth contracted in February at a rate of 3.8% y/y, following a contraction of9.2% y/y in January 2018 (see figure 2).
  • Both medium and heavy commercial vehicles fell in February to 13.4% y/y and 14.6% y/y respectively, from a dip of 6.1% y/y and growth of 3.0% in January. This is reflective of relatively weak rates of fixed investment expenditure.
  • Passenger vehicle sales fell at a slower rate in February to 0.4% y/y, after dipping 11.8% y/y in January.
  • With SA on a more positive growth trajectory, and barring a further credit rating downgrade, an improvement in economic growth is forecast which would lend support to new vehicle sales in the domestic market. This sentiment is supported by new vehicle traders, who expect conditions to pick up in Q1.18, albeit modestly, according to the BER’s latest Q4.17 retail survey (see figure 3).
  • This positive sentiment was reiterated by Naamsa which “anticipates further modest improvement in domestic new vehicle sales during 2018”.
  • It further states that “economic growth could well recover to a level above 1.5% in 2018. Replacement demand and reduced vehicle price inflation, as a result of the stronger Rand, should support new vehicle sales in the months ahead.”
Figure 2: New Vehicle Sales by Category
Figure 3: New vehicle sales versus new vehicle trader confidence