The latest new-vehicle sales data for the month of May, released by the National Association of Automobile Manufacturers of South Africa (Naamsa), shows that while new-vehicle sales are on the rise, the market has not yet escaped the full effect of the recent economic slump. Aggregate industry domestic sales for the month of May improved by 2 389 units (6,1 per cent) to 41 555 vehicles compared with May 2010, but represents a significant decline in the rate of growth compared with earlier months.
This is probably not concerning, as continued growth is expected and sales remain on target to register overall growth in domestic sales of around 15 percent for 2011, but growth in both domestic and global markets remain less than robust.
On a positive note, new-car sales remained strong and, at 28 830 units, reflects an improvement of 3 106 new cars (12,1 per cent) compared with May 2010. It also appears that concerns over disrupted supply of products, components and raw materials from Japan has either been weathered or are yet to be registered.
However, there have been constraints on the availability of components and built-up vehicles from Japan (that impacted on the production of certain product lines in South Africa) and was a limiting factor in the growth rate of sales. That said, all reporting Japanese manufacturers, barring Honda, posted higher sales in May compares with April and many local assembly plants were able to continue operating at planned capacities. It is expected that the supply position from Japan, and exports to that country, will improve over the coming months.
The higher sales of new cars over the last 18 months indicate a continued recovery of the demand-side of the economy; largely driven by a six-and-a-half per cent decline in the interest rate since the end of 2008 and a strong rand exchange rate that had a positive impact on the rate of inflation on imported goods. Overall, 82,6 per cent of new-vehicle sales represented dealer sales, also indicating improved consumer sentiment and spending. Finance minister Pravin Gordhan also recently announced that South Africa’s overall gross domestic product (GDP, one way of measuring the economic health of a country) grew by 4,8 percent in the first quarter of the year, which is encouraging.
Strong sales performances from new models such as the Chevrolet Captiva, Nissan Micra and Toyota Aygo were expected, but worth noting were large growth in the sales of older products: The Chrysler Group performed well with its Jeep Patriot, Chrysler Grand Voyager and Dodge Caliber. The Alfa Romeo Giulietta and Fiat 500 also performed much better compared with April 2011, as did the Ford Figo and Fiesta as well as the Nissan Qashqai. What is interesting is the fact that many of these compete in the more affordable A and B-segments of the market. Strong growth was also posted by Mercedes-Benz (posting significant growth for its B-, E-, M- and C-Class) and Land Rover (Discovery 4). It promises to be a good year, considering the planned introduction of numerous exciting models before year-end and it will be interesting to see what effect the recent introduction of the VW Polo saloon will have on VW’s sales performance in June.
Other 2011-inductees include the Audi A6 (imminent), BMW 1 Series (November, 2011), Chevrolet Orlando (3rd quarter), Chevrolet Utility (late-2011), Ford Focus (3rd quarter), Honda Civic hatch and saloon (late-2011), Hyundai Elantra (3rd quarter), Kia Picanto (3rd quarter) and Rio, Mercedes-Benz SLK and CLS (both late-2011), Nissan Juke (late-2011) and Leaf (possibly late-2011) as well as the facelifted Murano (3rd quarter), Peugeot 308 facelift (imminent) and 508 (also imminent), Range Rover Evoque (late-2011), Suzuki Kizashi (imminent), Toyota FJ Cruiser (soon), new Yaris (late-2011) and Etios (late-2011), VW Amarok single cab (imminent), VW’s new Jetta (imminent) and the facelifted Tiguan (late-2011).
However, challenges remain. The inflation rate will not remain flat for long and will, most likely, force the reserve bank to increase the rate of borrowing in the near future. The rand may also come under pressure as the global economy continues its recovery. That said, indications of higher growth in the global and South African economy in 2011, growth in consumer expenditure and buoyant public infrastructure spending will continue to support domestic and export sales.
Exports of SA-built vehicles in May reflected a decline of 2 117 units (8,8 per cent), compared with May 2010, but with all factories having returned to normal production after the holiday-periods during April, export numbers are expected to increase during the months ahead.
Further positive signs include the increasing and significant capital investment in local production facilities by manufacturers gearing up for the impending Automotive Production and Development Programme (APDP). Good news from Ford is that the company recently completed the upgrade of its Struandale engine plant and is on track to start production of the new Ranger bakkie at its Silverton assembly plant near the end of September.
Somewhat surprisingly, sales of new light commercial vehicles (LCV), bakkies and minibuses for May fell by 7,9 per cent compared with May 2010, and sales of medium- and heavy commercial vehicles turned in a mixed performance: the medium segment declined by 5,0 per cent while heavy truck sales increased significantly by 19,1 per cent.
