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The National Association of Automobile Manufacturers (Naamsa) expects new vehicle sales to show steady improvement over the medium term.
This is due to what it regards as a further recovery in domestic demand supported by continued moderation in new vehicle price inflation; rising real disposable consumer income; recent improvement in South Africa’s political and policy environment; lower interest rates; and the maintenance of an investment grade rating with a stable outlook for the country.
"As a result of these developments - reinforced by improved business and consumer confidence as well as increases in the SA Reserve Bank leading indicator – economic growth for 2018 could recover to around 1.8%," Naamsa said in a statement.
"This in turn would benefit domestic new vehicle sales over the balance of the year and an annual improvement of domestic sales volumes of more than 3% compared to 2017 is possible."
Global growth to boost exports
Robust global growth should also benefit new vehicle exports going forward. Naamsa expects exports to show good upward momentum in the months ahead.
Europe remains the dominant region for South African new vehicle exports, while potential new growth markets include Asia and Australasia.
Following three years of sharp declines in export sales to African markets, 2017 exports recorded a marginal increase. This suggests to Naamsa that demand from the rest of Africa is stabilising at relatively low levels.
Exports to North America declined and this trend is expected to continue as exports of the BMW 3 series to the US come to an end.
Fin24 recently quoted Kriben Reddy, head of TransUnion Auto, as saying that while the extended period of rand weakness a year ago drove consumers to the pre-owned vehicle market, new data shows the pendulum is swinging back to the new vehicle market in SA.
"New cars were back in vogue during the first quarter of the year as competitive prices driven by rand strength, lower interest rates and inflation boosted demand by consumers on the hunt for enhanced value," said Reddy.
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