Commenting on the new vehicle sales statistics for the month of February, 2018 – released today for
public consumption via the website of the Department of Trade & Industry – the Association said that the
weaker trend in domestic new vehicle sales in recent months had continued during February with all
market segments, including exports, registering year on year declines. In the event, aggregate domestic
sales at 46 347 units had declined by 1 854 vehicles or 3.8% from the 48 201 vehicles sold in February last
year.
February, 2018 export sales at 27 437 vehicles had registered a fall of 1 681 units or a decline of
5.8% compared to the 29 154 vehicles exported in February last year. However, exports for the first two
months of the year remained 2% above the corresponding two months in 2017.
Overall, out of the total reported Industry sales of 46 347 vehicles, an estimated 38 920 units or 84%
represented dealer sales, an estimated 9.7% represented sales to the vehicle rental Industry, 3.7% to
industry corporate fleets and 2.6% to government.
The February, 2018 new car market had held up relatively better than the commercial vehicle segments
and at 31 200 had registered a marginal fall of 123 cars or a decline of 0.4% compared to the 31 323 new
cars sold in February last year. Due to seasonal factors, the car rental industry contribution had declined
but still accounted for about 13.9% of new car sales in February, 2018.
Domestic sales of new light commercial vehicles, bakkies and mini buses reflected continued weakness
and at 13 212 units during February, 2018 had registered a fall of 1 410 vehicles or a decline of 9.6%
compared to the 14 622 light commercial vehicles sold during the corresponding month last year.
Sales in the low volume medium and heavy truck segments of the Industry had also remained under
pressure and at 574 units and 1 361 units, respectively, had recorded a fall of 89 vehicles or a decline of
13.4% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses, a decline of
232 vehicles or a sharp fall of 14.6% compared to the corresponding month last year.
The lower commercial vehicle sales figures reflected subdued investment sentiment in the economy.
Recent improvement in the Reserve Bank’s leading indicator and further recent increases in the
Purchasing Manager’s Index, anticipated an improved outlook for the economy over the medium term.
The considerable appreciation in the value of the Rand would also reduce inflationary pressures. Recent
positive political developments and improved business confidence should also serve to support higher
economic growth in 2018 and provided South Africa was able to avoid a further credit ratings downgrade
at the end of the first quarter of 2018, actual economic growth could well surpass current expectations. In
such an environment, economic growth could well recover to a level above 1.5% in 2018. Replacement
demand and reduced vehicle price inflation, as a result of the stronger Rand, should support new vehicle
sales in the months ahead.
The February, 2018 Budget had reiterated government’s commitment to fiscal consolidation, limiting
government expenditure and ensuring that State Owned Enterprises would be subjected to strict
governance and operational standards. However, the increase in Value Added Tax, vehicle emissions
taxes, the substantially higher advalorem duty for premium luxury vehicles with retail selling prices in
excess of R900 000 as well as the substantial increase in the fuel levy would impact on consumers’
disposable income and could impact new vehicle sales from April, 2018 onwards. Hopefully, this would
be outweighed by a higher economic growth rate.
New vehicle exports in 2018 should reflect fairly strong upward momentum on the back of improved
growth in the global economy. An increase of around 10% in vehicle export sales volumes was possible in
2018.