Rental companies behind sharp drop in January new vehicle sales
New vehicle sales may have dropped sharply in January but there were plenty of reasons to be cheerful about prospects for the rest of the year, says Ghana Msibi, head of sales and marketing at WesBank.
Sales of all new vehicles totalled 45,888, down 8.9% from the 50,386 of January 2017. Car sales fell 11.6%, from 36,908 to 32,642, while most categories of commercial vehicles also went backwards, according to figures released by the Department of Trade and Industry.
The biggest cause of the slide was a 33% decline in car sales to rental firms, said Msibi. They have plenty of stock after propping up the market in 2017.
Volkswagen SA’s year-end manufacturing switch to new Polo and Vivo models had created a supply challenge, while the absence of Chevrolet, following General Motors’ December disinvestment from SA, had also complicated purchases for some consumers.
January sales have often been misleading in the context of full-year sales, and Msibi said it would be premature to read much into the numbers.
"January is always an anomaly," he said.
Msibi believed the 2018 market would rise above the 1.8% growth achieved in 2017.
"I see more tailwinds than headwinds," he told Business Day.
The former included the fact that new vehicle sales to private consumers in January rose 1.1% and credit applications by 9%.
The National Association of Automobile Manufacturers of SA (Naamsa) suggested 2018 sales growth could exceed initial forecasts of 2%-4% if economic growth targets were met.
Naamsa was also bullish about export prospects after January shipments of new vehicles leapt 22% from a year earlier — from 11,651 to 14,212.
That was good news after an ultimately disappointing 2017, when forecasts of an all-time record were not met.
"Exports in 2018 are expected to show fairly strong upward momentum on the back of improved growth in the global economy," the association said.
"At this stage, an increase of about 11% on 2017’s 329,053, to a total of 366,050 export sales, is anticipated for the year."
That would exceed the 344,822 exports of 2016.