South Africa’s new vehicle sales grew 4.1% in July with a total of 46 719 units sold, reports the National Association of Automobile Manufacturers of South Africa (Naamsa).
The biggest highlight in the SA auto industry is the massive improvement in export sales; 35 486 vehicles, an increase of 6456 units or 22.2% compared to the 29 030 vehicles exported in July last year.
What does this all mean for the local auto industry? Naamsa responds below:
‘Lack of confidence’ in auto industry
Naamsa said: “The domestic automotive industry is holding up relatively well in the current difficult economic environment.
“Domestic new vehicle sales closely correlated with the overall performance of the economy and confidence levels. The fundamental challenge confronting the country at present was a lack of confidence, on the part of business and consumers.
“Concerted steps are 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 most encouraging, claimed the organisation.”
Naamsa said: “The recent 25 basis points reduction in interest rates should provide some relief for hard pressed consumers, whilst 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.”
‘Sales fairly flat’
“Naamsa anticipates that the overall market for 2017 would probably turn out to 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%,” said the organisation.
WesBank’s, head of Brand and Communications, Rudolf Mahoney, says: “July’s sales performance can be attributed to positive changes in the underlying fundamentals in the market. We see this in our data, where the demand for new vehicle finance is up 9% this past month.”
Mahoney says: “Headline inflation and new vehicle price inflation have declined, following a strong performance by the Rand.”
Vehicle manufacturers have also taken advantage of the performance of the currency to directly pass value to consumers, says WesBank.