The National Association of Automobile Manufacturers of South Africa (NAAMSA) today released encouraging results of new-vehicle sales for the month of September. As was the case for August, most segments registered an improvement on the corresponding month last year, abating the slowing in the growth rate of new-vehicle sales, but the outlook for new-vehicle sales for the remainder of the year, as well as 2012, remains gloomy.
Aggregate industry domestic sales for the month of September improved by a staggering 12 539 units (30,0 per cent) to 54 364 vehicles compared with September last year. Total year-to-date domestic new-vehicle sales for the first nine months of 2011 now stands 16,2 per cent ahead of the corresponding months in 2010, and is above industry forecasts.
New-car sales reflected and improvement of 7 851 units (26,2 per cent) – reflecting a massive improvement in growth. The new car market continues to be supported by strong demand from rental companies, with more than one in every five new cars sold represented by a rental company.
The strength of the new-vehicle market in September can be attributed to a number of factors including aggressive marketing and sales incentive programmes along with the introduction of numerous volume-selling new models. Further factors include the relative affordability of vehicles in real terms as well as the ongoing improvement in consumer spending on the back of a steady and low interest rate. It may also be that consumers are pushing forward their purchases in the light of an uncertain fiscal and monetary economic outlook in the near future.
Sales of new light commercials, bakkies and minibuses also exceeded expectations and registered an increase of 41,5 per cent compared with September 2010. This segment remains buoyant (up 10,9 per cent for the first nine months of 2011 compared with the same period during 2010) in the light of new-model introductions and ongoing growth in infrastructure investment.
Sales of vehicles in the medium and heavy commercial segments again reflected great performances and recorded an increase of 237 units (38,4 per cent) in the case of medium commercials and 342 units (25,7 per cent) in the case of heavy trucks and buses when compared with September last year. The sales performance of commercials reflect the positive fixed investment associated with major infrastructure projects and remains well ahead of the corresponding nine months of 2010. It is likely for this trend to continue to the early parts of next year, but a weakening domestic currency and pricing pressures could have an effect on this.
Exports of SA-built vehicles in August reflected an increase of 13 399 units (106,9 per cent), compared with the depressed base of September 2010. This positive growth is expected to continue with numerous new-vehicle production schedules, such as the Ford Ranger bakkie, due to start before the year is out.
The latest sales results is cause for optimism, but new-vehicle sales over the balance of the year are likely to come under increasing pressure as the macro environment is become increasingly unsupportive for the consumer market. The projected annual growth rate for new-vehicle sales of 15 per cent is still unlikely, but the launch of numerous models at the Johannesburg International Motor Show is sure to have a positive impact on the situation.
The weakening rand is set to have an adverse impact on vehicle prices, with some experts predicting average new-car price increases of 20 per cent during the course of 2012.
Subdued growth in private sector credit extension (and signs of a rise in interest rates early next year) and in money supply, sharply higher inflation and administered price increases (most noticeably electricity and fuel costs) will have a drastic impact on future consumer demand. These factors will undoubtedly impact on new-vehicle sales for the remainder of 2011.
