“Despite the surprisingly better than expected sales results for September, the fundamentals have not changed, the economic outlook is still not looking positive, the rand continues to weaken which will undoubtedly continue to drive above-inflation new car increases. As expected, the export market continues to outshine the rest of the industry and this trend will continue for the remainder of 2014.”
General Comments on September 2014 NAAMSA sales:
- The month of September 2014 experienced a 9.26% increase in sales compared to August 2014.
- Month on Month only Passenger (13.10%) and Light Commercial Vehicles (1.70%) experienced positive growth.
- Year on Year monthly comparison shows an increase of 11.51% in September 2014 compared to September 2013.
- Year to date (January – September 2014) comparisons shows that vehicle sales are down by -2.5% in the first 9 months of the year when compared to last year.
- Month on month Exports decreased in September (-6.7%) with Passenger vehicles increasing by 13.8% and Light Commercial Vehicles growing by 42.1%.
- Year on year monthly comparison shows an improvement in exports of 257.9% in September 2014 compared to September 2013.
- AMH & AAD saw an increase in September 2014, 6.3% month on month.
General Comments on September 2014 Standard Bank VAF Personal Applications:
- In September 2014 applications for new vehicles experienced negative month on month growth of -1.1% while applications for used vehicles had negative month on month growth of -2.9%.
- Year on year monthly comparison on applications shows a decline in both new (-34.0%) and used (-1.4%) vehicle market applications in September 2014 compared to September 2013.
- Applications in both Passenger Vehicles (-2.5%) and Light Commercial Vehicles (-2.3%) in the Personal market had negative month on month growth in September 2014.
- Year on year monthly comparison shows positive growth for both Passenger Vehicles (0.8%) while Light Commercial Vehicles had negative growth (-3.1%) in September 2014.
- The proportion of applications with RV’s increased to 19.7% in September 2014 from 19.2% in August 2014. However, month on month applications with RV’s declined by 2.0%.
- The proportion of applications with deposits decreased to 33.3% in September 2014 from 39.2% in August 2014. Applications with deposits declined by -17.0% month on month.
- The Average Contract Term on applications increased from 67.0 months to 68.5 months (September 2013 to September 2014), year on year growth of 2.4%.
- The average application size increased from R189 755 in September 2013 to R209 865 in September 2014, a 10.6% year on year increase.
General Comments on September 2014 Standard Bank VAF Personal New Business:
- In September 2014 new business experienced negative month on month growth in new vehicle markets of -12.5% while the used vehicle markets had positive month on month growth of 9.1%.
- New business year on year comparisons shows a decline in both new (-34.3%) and used (-19.6%) vehicle markets in September 2014 compared to September 2013.
- Passenger vehicles had negative month on month growth of -11.5% while Light Commercial vehicles had negative growth of -4.2%.
- Year on year monthly comparison shows a decline for both Passenger Vehicles (-15.5%) and Light Commercial Vehicles (-18.2%) in September 2014 compared to September 2013.
- The proportion of new business deals with deposits decreased to 43.3% in September 2014 from 45.5% in August 2014 (0.7% month on month decline and -44.1% year on year increase).
- The proportion of new business deals with RV’s stayed the same at 25.6% between August and September 2014. New business deals with RV’s declined month on month by -2.7% and -28.7% year on year.
- The Average Contract Term increased from 64.5 months in September 2013 to 66.2 months in September 2014 (2.7% year on year growth).
- The average deal size increased from R260 966 in September 2013 to R288 606 in September 2014, a 10.6% year on year increase.
General Comments on Standard Bank Personal VAF Book:
- Personal Market book shows new vehicle market decreased from 57.5% in September 2013 to 55.8% in September 2014, while used vehicle market increased from 42.5% in September 2013 to 44.2% in September 2014.
- Passenger Vehicles marginally increased from 89.2% in September 2013 to 88.7% in September 2014 while Light Commercial Vehicles increased from 10.3% in September 2013 to 10.8% in September 2014.
General Macro and Industry Comments:
- The SARB left the repo rate unchanged at 5.75% following its September MPC meeting. The outcome was in line with the industry’s forecast. According to Standard Bank this was based on the SARB’s revised forecasts for headline inflation.
- Headline annual inflation rate (CPI) in August 2014 was 6,4%. This rate was 0.1 of a percentage point higher than the corresponding annual rate of 6.3% in July 2014. On average, prices increased by 0.4% between July 2014 and August 2014. Transport index increased by 0.4% between July 2014 and August 2014. The annual rate decreased to 6.1% in August 2014 from 6,9% in July 2014.
- The SARB expects headline CPI inflation to average 6.2% in 2014, falling to 5.7% in 2015 and 5.8% in 2016, as opposed to their forecast in July of 6.3%, 5.9% and 5.6% in the respective years. Inflation was revised lower due to lower expected food and petrol prices.
- The change in the SARB’s outlook for inflation is significant in that they no longer expect inflation to peak in Q4:14, and estimate that the peak has already happened, in Q2:14 at 6.5% y/y.
- In addition, the length of time that the SARB expects inflation to remain outside of the target band has shortened, they expect it will fall below 6.0% in Q1:15 as opposed to in Q2:15.
- Growth was also revised lower, from 1.7%, 2.9% and 3.2% y/y in 2014, 2015 and 2016 respectively to 1.5%, 2.8% and 3.1%. Standard Bank expects GDP for 2015 and 2016 to continue to disappoint to the downside. The SARB has lowered its growth forecast for 2014 successively at each of the last six meetings (starting from 3.3% at the September 2013 meeting).
- Fuel prices have risen by 0.5% in petrol (inland) and dropped by -3.2% in diesel (inland) since Jan 2014 to October 2014. Further, the price of fuel in the country has gone up by 28.8% in petrol and up by 21.2% in diesel since Jan 2012.
- The price of 93 Octane Petrol will be increasing by 2 cents from the 1st of October 2014. The price of 95 Octane fuel will be decreasing by 5 cents while both grades of Diesel will see a drop of 13 cents.
- In the month of August 2014, Petrol vehicle sales had negative month on month growth (-5.6%) while Diesel vehicle sales had positive month on month (1.0%).
- Year on Year August 2014 versus August 2013 Petrol vehicles declined by -2.1% while Diesel vehicles declined by -0.1%.
- Year on Year YTD comparison for 2014 shows that Petrol vehicle sales declined by -6.6% while Diesel vehicle sales increased by 0.2%.