Aggregate domestic new vehicle sales recorded an encouraging improvement in July, led by new car and light commercial vehicle sales. Medium and heavy commercial vehicle sales, however, remained under pressure.
July 2017 saw total new vehicle sales at 46 719 units – an increase of 1 849 units or 4.1% from the 44 870 vehicles sold in July last year. Last month’s export sales of 35 486 vehicles registered a gain of 6 456 units, a massive improvement of 22.2% compared to the 29 030 vehicles exported in July last year.
Overall, out of the total reported industry sales of 46 719 vehicles, an estimated 36 999 units or 79.2% represented dealer sales, 13.8% represented sales to the vehicle rental industry, 3.9% to government and 3.1% to industry corporate fleets.
Breakdown by sector
The July 2017 new car market reflected an encouraging turnaround and at 30 826 units had recorded a gain of 1 791 cars or an improvement of 6.2% compared to the 29 035 new cars sold in July last year. The car rental Industry had accounted for an estimated 18.2% of new car sales over the period. The rental industry share was understated since it excluded data for a number of automotive companies.
Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 13 774 units during July, 2017 reflected a modest gain of 231 vehicles or an improvement of 1.7% compared to the 13 543 light commercial vehicles sold during the corresponding month last year. This followed an improvement of light commercial vehicle sales in recent months.
The medium and heavy truck segments of the Industry continued to experience extremely difficult trading conditions and at 598 units and 1 521 units, respectively, reflected a decline of 115 vehicles or 16.1% in the case of medium commercial vehicles and, in the case of heavy trucks and buses, a decline of 58 vehicles or a fall of 3.7 % compared to the corresponding month last year.
As previously anticipated, industry new vehicle exports, at 35 486 units during July 2017, reflected a substantial increase of 6 456 units or a gain of 22.2% compared to the 29 030 vehicles exported in July last year. The momentum of vehicle exports was expected to improve further over the balance of 2017.
According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), the domestic automotive industry has been holding up relatively well in the current difficult economic environment. Domestic new vehicle sales were closely correlated with the overall performance of the economy and confidence levels.
The association suggests that the fundamental challenge confronting the country at present is lack of confidence – on the part of business and consumers. Concerted steps were required by business, government and labour to create a more investor-friendly environment as a means of boosting growth. The improvement in new car sales and the strength in recent months in the light commercial vehicle segment were therefore encouraging.
The recent 25 basis points reduction in interest rates should provide some relief for hard pressed consumers, while the progressive improvement in South Africa’s trade balance over the past two years would support the exchange rate and in turn would moderate new vehicle price inflation.
NAAMSA continues to anticipate that the overall market for 2017 will be fairly flat at levels similar to those recorded in 2016. Vehicle exports should continue to benefit from global economic growth at about 3.5%.