- New vehicle sales reflected an increase in month to month growth of 12.6% compared to a decline of18.1% m/m in December. December traditionally sees lower sales volumes as purchases are typically postponed to January so new year registrations can be obtained.
- However, the monthly increase in new vehicle sales in January was lower than in January 2017 and consequently the base factors will have contributed to the contraction in the year on year rate of 8.9%in January 2018 versus -2.2% y/y in December 2017.
- In January, passenger vehicle sales declined by 11.6% y/y versus a 6.2% y/y contraction in December.Commercial vehicle sales declined by 1.7% y/y in January versus an increase of 6.5% y/y in December.
- In terms of the year ahead, the National Association of Automobile Manufacturers of South Africa(NAAMSA) NAAMSA “anticipates further modest improvement in domestic new vehicle sales” to 2.6%y/y in 2018, from growth of 1.8% y/y in 2017.
- NAAMSA expects passenger vehicle sales to rise 1.9% y/y, matching 2017’s growth rate. Commercial vehicle sales growth was forecast at 3.9% y/y in 2018 versus 1.7% y/y in 2017.
- The expected new vehicle sales performance would be consistent with the projected lift in GDP growth this year to above 1.0% y/y on the anticipated strengthening in business and consumer confidence post the December ANC elective conference.
- In addition to the confidence effect, consumption expenditure growth is expected to lift slightly with inflation expected to recede this year, lending some support to household finances. Moreover, shoulder and strength be sustained it would serve to stem new vehicle price inflation which would enhance affordability (see figure 3).
- However, these effects would be partially countered by tax increases, should they materialise, in the2018 Budget. Moreover, for as long as consumer credit supply conditions remain tight a particularly robust rebound in passenger vehicle sales would be unlikely (see figure 4).
- The performance of the commercial vehicle sales segment is likely to remain affected by levels of business confidence, which in turn affect private sector investment rates (see figure 5).
- Vehicle exports rose by 22.0% y/y in January following a 7.1% y/y decline in December. According toNAAMSA in 2018 “vehicle exports expected to recover on the back of positive global economic growth prospects”.
