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New vehicle domestic sales grew by 3% in June, ahead of industry expectations, the National Association of Automobile Manufacturers of South Africa (Naamsa) has said.
Naamsa released vehicle sales statistics for the month of June on Monday afternoon.
New vehicle sales came to 46 678 units, compared to the 45 332 units sold in June 2017.
However, exported vehicles declined 15.2%, from 31 595 units to 26 790 units, over the same period.
"The improvement in domestic sales, particularly new car sales, was encouraging, given recent weak economic growth and investment numbers," Naamsa said in a statement. "It appeared that the new car market had been supported by improved business and consumer confidence."
Naamsa expects the next few months to be challenging, given the decline in the Reserve Bank’s leading indicator, which is used to predict changes in the economy.
According to Naamsa, normally vehicle sales improve in the second half of the year. For this reason "modest" improvements are expected in domestic sales for 2018, compared to 2017.
Naamsa also projects growth in export sales, but warned that protectionist policies in the US and the increasing risk of a global trade war could impact international trade flows including vehicle exports.
Motor vehicle and business financier Wesbank is comfortable with June’s statistics, which tracks 5% behind its own forecast for sales growth.
"Historical trends have shown that sales in the second half of a calendar year are generally higher than the first," said Ghana Msibi, WesBank’s executive head for sales and marketing.
"Consumers are generally more cautious with big ticket purchases early in the year, often because of lingering December spending hangovers. Shorter months and fewer working days due to public holidays over the first six months also contribute to less sales activity."
Wesbank projects a 0.75% growth for the total industry and Msibi believes this is possible to achieve during the second half of the year.
Investec economist Lara Hodes also projects a small rebound in economic growth this year to 1.4% (compared to 1.3% in 2017) which would drive most demand going forward.
"However, imported cost pressures, coupled with rising fuel costs and other consumer taxes, could impede any notable lift in new vehicle growth this year," she warned.
