Vehicle sales record mix performance

Tuesday, August 3, 2010

Pretoria - New vehicle sales recorded a mixed performance in July with the aggregate industry sales improving by 20 percent to 41 367.

The National Association of Automobile Manufacturers of South Africa (NAAMSA) said that new car sales registered credible gains but that new light commercial vehicle sales showed signs of weakness.

"On balance, the latest aggregate sales numbers confirmed expectations of a moderation in the underlying growth momentum in the various sectors," NAAMSA said on Tuesday.

Aggregate sales at 41 367 vehicles had registered an improvement of 6 895 vehicles or 20 percent compared to the 34 472 motor vehicles during the same month in 2009.

"The year on year monthly improvement was below the 23.3 percent growth for the first seven months of 2010 and this in turn implied, as expected, slower growth," said the association.

Export sales made strong gains in July 2010 in relation to a very low base figure of the same month in 2009 when exports were badly affected as a result of the global financial meltdown.

Of the total NAAMSA industry sales of 35 555 vehicles 84.7 percent represented dealer/retail sales while 8.5 percent represented sales to the car rental industry, 3.7 percent represented industry corporate fleet sales and 3.1 percent sales to government.

"Aggregate industry new car sales during July, 2010 had been at the upper end of expectations and at 29 221 reflected an improvement of 7 159 units or 32.4 percent compared to the 22 062 new cars sold by the industry during July, 2009. The selling rate of new cars per day remained relatively robust."

In contrast to the relatively buoyant new car market sales of new light commercial vehicles, bakkies and minibuses at 10 375 in July showed a decline of 310 units or 2.9 percent compared to the 10 685 units of the corresponding month last year showing that the light commercial vehicle sales cycle had slowed significantly in comparison to previous months.

Medium and heavy truck segments sales in July also showed a mixed picture at 616 and 1 155 units respectively. Medium commercial vehicles recorded an increase of 58 units, while there was a slight decline of 12 units in the case of heavy trucks and buses in comparison to the same month last year.

"The growth momentum in the medium and heavy commercial vehicle segments had also slowed significantly," NAAMSA said.

In July, export sales of South African produced vehicles at 23 246 vehicles registered a gain of 12 038 units or an improvement of 107.4 percent compared to the 11 208 vehicles exported during July last year when export sales had been extremely depressed as a result of the global financial crisis.

Year to date new vehicle exports at 130 025 units have reflected an improvement of 38 361 vehicles exported or 41.8 percent compared to the 91 664 export sales during the corresponding seven months of 2009.

Nedbank economist Johannes Khosa said that vehicle sales are likely to remain firm for the rest of the year. "Vehicle sales are likely to remain firm during the remainder of this year, supported mainly by continued improvement in passenger car sales and export demand," he said.

"We expect interest rates to remain unchanged until the third quarter of 2011. However, a further drop in inflation and inflation expectations, coupled with a firmer rand and more data pointing to the fragility of the recovery would strengthen the case for another rate cut," said Khosa.

NAAMSA said that over the remaining months of the year new vehicle sales are anticipated to moderate with aggregate domestic sales for 2010 projected to expand by about 15 percent while export sales were projected to grow by about 30 percent.

"Factors that would influence domestic sales volumes during the remaining months of the year included the overall performance of the domestic economy, the inflationary consequences of the impending CO2 new car tax regime and the outcome of the current round of collective bargaining in the various sectors of the industry," said NAAMSA.

Earlier this year, Finance Minister Pravin Gordhan said that as of 1 September, environmental taxes on new cars in South Africa would be in operation. In order to influence consumer behaviour in favour of more fuel efficient vehicles that are less carbon emitting.

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