Although new vehicle sales slowed year-on-year in January, exports climbed. Naamsa and Wesbank say the outlook for the retail sector in the short to medium term remains positive.
According to the Department of Trade and Industry, aggregate new vehicle sales in January (52 306 units) fell by 1,2% compared with the 52 948 vehicles sold in January last year. Passenger cars sold were down 3,6%, but Light Commercial Vehicles up by 6%.
Wesbank said the decline in sales of new vehicles could largely be attributed to a 9,7% drop in activity in the rental market.
“Rental companies seem to be shifting their replacement cycle to the second half of the year – as we saw in the last six months of 2014,” said Rudolf Mahoney, head of research at WesBank.
Overall, out of the total reported new vehicle sales that were reported, 81,9% represented dealer sales, 11,3% rental vehicle companies, 4,0% to corporate fleets and 2,8% to government.
Naamsa said the latest SA Reserve Bank leading indicator had increased significantly to its highest level in nine months. Given the close correlation between new car sales and the leading indicator, this development augured well for vehicle sales in the short to medium term. Furthermore, the substantial rise in the purchasing managers’ index also suggested an improvement in business activity and manufacturing output in South Africa.
Meanwhile, WesBank’s Mobility Index indicates the monthly mobility costs for consumers are lower now than at the same point in 2014. The current Mobility Index, which tracks all of associated costs for owning and operating a car, suggests that compared with August 2014, consumers are now paying R3,99 less per litre.
“With interest rates remaining stable and manufacturer marketing incentives helping to drive sales the environment is conducive for marginal growth in the new vehicle market,” said Mahoney. “However, consumers would do well to not budget against savings at the pumps. Should the rand weaken or oil prices increase monthly household budgets will be under even more stress.”
“As a result of these factors, the outlook for 2015, in terms of new vehicle sales, had improved over the short to medium term and would be reinforced further by expectations of a higher economic growth rate of around 2.3% for the year,” Naamsa added.
Industry new vehicle exports during January, 2015 had registered, as expected, strong gains compared to the corresponding month last year. NAAMSA anticipated that on the back of normalised industry production, exports for 2015 would improve by around 15% to a record of about 320 000 vehicles.
