New vehicle sales increased by 6.3% y/y in September following a rise of 6.7% y/y in August and 4.0% y/y in July.
Passenger vehicle sales which comprise two-thirds of total sales, rose by 5.9% y/y in September versus an increase of 6.0% y/y in August.
The National Association of Automobile Manufacturers of South Africa (NAAMSA) has noted that “(r)educed new vehicle pricing pressures and overall lower inflationary trends together with the July 2017 25 basis points reduction in interest rates provided some relief for consumers. Furthermore, attractive sales incentives on offer also supported demand” (see figures 3 and 4).
Growth in commercial vehicle sales moderated to 7.1% y/y in September from 7.8% y/y in July, with just light commercial vehicles sales growth accelerating to 11.7% y/y from a prior 9.5% y/y. Medium and commercial vehicle sales contracted in September.
In the year to date to September, sales rose by 1.2% y/y compared to a contraction of 11.3% y/y in the same period of last year. Low statistical base factors partially account for the improvement in the year-on-year new vehicle sales outcomes. NAAMSA projects a flat sales performance for the year as a whole.
Indeed, consumer spending still faces headwinds in terms of persistently depressed consumer confidence, moderating real wage growth, deleveraging and tight credit conditions.
Light and medium commercial vehicle sales are likely to remain modest in line with the relatively subdued consumer (retail) environment. Heavy commercial vehicle sales should remain restricted by the weak investment climate that in turn reflects the effects of low demand, excess capacity and to an extent, perceived heightened policy uncertainty.
The Q3.17 BER Retail Survey showed that confidence among new vehicle traders remained depressed with only a modest recovery in vehicle sales expected (see figure 5).
The opinions and views expressed are for information purposes only and are subject to change without notice. They should not be viewed as independent research, recommendations or investment advice of any nature.