Picture: DAILY DISPATCH
Picture: DAILY DISPATCH

SA’s motor industry may finally be climbing out of a new-vehicle sales slump lasting nearly four years but it will take only one piece of bad news to set the market back on its heels, analysts said at the weekend.

Figures released on Friday by the Department of Trade and Industry showed that in November year-on-year sales improved for the sixth month in a row. The industry sold 49,754 new vehicles, 7.2% more than the 46,397 of November 2016. Cars were up 16.4%, from 28,207 to 32,821.

Aggregate vehicle sales for the first 11 months of 2017 rose 2.2%, from 505,903 to 516,954. Cars grew 2.6%, to 341,521.

The market has improved steadily since May, after it had been devastated by plunging business and consumer confidence caused by political turmoil and the economy’s relegation to junk status by ratings agencies. At that stage, all forecasts were for the 2017 market to continue the steady decline that began in 2014.

Now, WesBank analyst Rudolf Mahoney said the market was "edging towards recovery phase and exiting the downturn of the past few years". He predicted full-year 2017 sales would improve by about 2% — a view shared by Simphiwe Nghona, head of vehicle and asset finance at Standard Bank.

Their views diverged on likely further growth in 2018 — Nghona thought 2%-3% and Mahoney 3%-5% — but they agreed that the market was too sensitive for confident forecasts.

The choice of a new ANC leader would have a big effect on economic and buyer sentiment, said Nghona.

Friendly interest-rate movements in 2017 had reassured consumers but it would take only one rise to undo much of the improvement.

Other reasons for the improved second-half performance included price restraint by manufacturers and sales incentives by dealers. Last week it was possible to get a R250,000 discount on a well-known offroad vehicle.

Not everything in the November sales figures was positive. Sales of light commercial vehicles were 7.4% weaker than a year earlier, though Mahoney said this was because the previous November had been particularly strong. And exports of South African-made vehicles were miserable; at 31,493, they were 13.7% down on November 2016. For the first 11 months of 2017, they fell 4.4%.

Toyota SA and Volkswagen SA (VWSA) were the main causes of November’s decline. Toyota’s Durban plant is still recovering from disruptions caused by October’s fierce storms. At VWSA’s Uitenhage plant in the Eastern Cape, production has slowed as the firm prepares to launch a new product range in early 2018.

furlongerd@fm.co.za

Please sign in or register to comment.