Pretoria - Vehicle sales continued registering strong gains in March, surging by 22.8 percent year-on-year, says the National Association of Automobile Manufacturers of SA (NAAMSA).
Aggregate industry domestic sales improved by 22.9 percent to 53 478 vehicles from 43 541 units sold during March 2010.
For the first quarter of 2011, total domestic sales were 22.2 percent ahead of the corresponding three months in 2010. Looking at exports, total sales at 29 254 vehicles for March 2011 represented the highest monthly vehicle export performance on record.
Aggregate industry new car sales in March at 35 167 reflected a substantial improvement of 23.5 percent compared to the 28 464 new cars sold in March 2010.
"The strong recovery in sales of new cars over the past 15 months reflected a robust recovery on the consumption side of the South African economy driven by the 6.5 percent decline in interest rates since December 2008, which had improved the financial position of consumers and businesses and reduced the debt servicing costs of households and companies," said NAAMSA on Monday.
Sales levels were also improved by aggressive marketing campaigns, while concerns about the future availability of Japanese vehicles [due to recent natural disasters] may have contributed to some pre-emptive buying in March.
Of the total industry reported sales of 53 478 vehicles, 86.2 percent represented dealer sales while 6.3 percent represented sales to government and 4.1 percent industry corporate fleet sales. Sales to the car rental industry accounted for 3.4 percent of sales.
New light commercial vehicles, bakkies and minibuses at 15 736 sales in March showed an improvement of 21.7 percent compared to the 12 927 units sold in the corresponding month last year.
"As anticipated, light commercial vehicle sales are starting to show signs of a fairly strong revival on the back of improved economic activity levels," said NAAMSA.
The sales of medium and heavy truck segments, with the exception of the low volume bus segment, continued improving in March at 884 and 1691 units respectively recorded a gain of 16.8 percent in the case of medium commercials and 21.4 percent in the case of heavy trucks and buses compared to the same period last year.
The association said the ongoing gains in medium and heavy truck sales suggest an improvement in fixed investment sentiment in the economy.
In March 2011, export of South African produced vehicles at 29 254 vehicles represented the highest number of vehicles exported in a single month. Sales improved by 37.4 percent compared to March 2010's 21 296.
"With further recovery in the global economy expected during course of 2011, industry export sales were expected to reach 300 000 units in 2011.
"Barring further geo-political shocks, the global economy was expected to grow by about 4.5 percent in 2011 and South Africa's growth rate was projected to improve from 2.8 percent in 2010 to about 3.5 percent in 2011. This would lend support to domestic and export sales of new motor vehicles," said NAAMSA.
Additional support is expected to come from higher levels of consumer expenditure and public sector infrastructural investment.
"The higher projected sales and corresponding production volumes should benefit the component supplier industry and employment levels. However, rising inflationary pressures mainly as a result of administrative price and taxation increases would combine to put upward pressure on interest rates towards the end of 2011 and into 2012.
"Component and vehicle stock shortages, as a result of the Japanese earthquake and tsunami, could also have a negative, but hopefully temporary impact on domestic sales and exports," explained the association.
Nedbank economists said they expected passenger vehicle sales to continue to benefit from the low interest rates as well as income growth in 2011, although high household indebtedness and a weak labour market will restrict the rate of recovery.
"The gradual recovery in fixed investment activity should support sales of commercial vehicles. However, growth in vehicle sales is likely to slow as 2011 progresses because of the higher base established during 2010.
"We expect the repo rate to remain steady throughout 2011, despite the MPC highlighting higher cost-push inflation at its recent policy meeting. However, upside risks have increased and much will depend on developments in international oil prices and the rand," said Nedbank. - BuaNews
