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Cape Town - For the first time in four years, new vehicle sales in South Africa recorded a year-on-year improvement in 2017, although at a modest 1.8% in volume terms, the National Association of Automobile Manufacturers of South Africa (Naamsa) said on Tuesday.
The improvement was due to modest gains in new car and light commercial vehicle sales. Naamsa sees this as encouraging given subdued economic growth and pressure on consumers. In its view, the marginal decline in interest rates in July 2017 also had a positive effect.
"Major contributory factors to the improved new car and light commercial vehicle sales were the continued strong contribution by the car rental sector which accounted for an estimated 16.0% of new car sales during the year as well as unprecedented sales incentives by manufacturers and importers particularly during the second half of 2017," Naamsa said in a statement.
At the same time, it said vehicle sales ended 2017 on a weak note. The aggregate new vehicle sales for December 2017 was 40 636 units - a decline of 1 008 vehicles (2.4%) compared to December, 2016.
The December 2017 new passenger car market and light commercial vehicle market showed a year-on-year volume decline of 6.4% in the case of cars, but an improvement in the case of light commercial vehicles of 7.0%. Sales of medium and heavy commercial vehicles were essentially unchanged year-on-year.
In contrast, export sales recorded a decline in December 2017. At 17 374 units it reflected a fall of 1 333 vehicles (7.1%) compared to December 2016. Yet, 2017 vehicle exports were still the third highest annual industry export figure on record.
"Assuming continued improvement in the global economy, industry export sales during 2018 are projected to improve by about 37 000 vehicles (11.0%) to reach a total projected number of 366 000 export units," said Naamsa.
"Taking into account the time effect of various new model introductions, the new car market should improve during 2018 by around 2.0% and the light commercial vehicle market by double that percentage."
Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa is expected to show an increase from 588 000 vehicles produced in 2017 to close on 635 000 vehicles in 2018 – about 8.0%. This figure could prove conservative if vehicle exports expand more than currently anticipated.
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