April’s revved up new-vehicle sales off an 'utterly atrocious' low base
Still, a 3.6% improvement is welcome in any circumstances – particularly when it may rise later to 4.6%
Do not get too carried away with April’s 3.6% improvement in new-vehicle sales from a year earlier, says WesBank analyst Rudolf Mahoney.
After all, he says, we are comparing with an “utterly atrocious” month when the market collapsed after former president Jacob Zuma’s firing of finance minister Pravin Gordhan and other actions that caused the country’s credit rating to be reduced to junk status.
Still, a 3.6% improvement is welcome in any circumstances – particularly when it may rise later to 4.6%.
The Fiat and Chrysler brands, though part of the same global group for some years, officially merged into a new local firm, Fiat Chrysler Automobiles SA, on May 1. Delays caused by integration of data and systems means comprehensive sales details will not be ready until mid-May.
Based on past performance, the National Association of Automobile Manufacturers of SA (Naamsa) said the new company probably sold about 350 vehicles in April. That would add almost 1% to the market.
Without Fiat Chrysler, the industry sold 36,346 vehicles in April, compared to 35,086 in April 2017. Car sales rose 6.4%, from 22,490 to 23,928. Light commercial vehicles, mainly bakkies and minibuses, fell 1.2%, from 10,707 to 10,580.
Medium commercial vehicles fell 12.1% and sales of heavy trucks and buses improved 1.3%. In the first four months of 2018, the industry sold 177,617 vehicles, 2.6% behind 2017’s 182,371. Car sales trailed by 1.6%: 119,774 compared with 121,753.
The main reason for the cars deficit was a 23% drop in comparative sales to the car rental industry, said Mahoney. These sales accounted for 13% of the total market so any significant drop would have a noticeable effect. Rental sales, however, started to pick up in April.
As predicted, April sales to private buyers were affected by the April 1 increase in value-added tax, which led to many customers buying early.
“In some respects, April was an ugly sales month and I’m hoping some normality will return to the market now it’s over,” said Mahoney.
Naamsa said: “We expect sales to show steady improvement over the medium term due to further recovery in domestic demand supported by continued moderation in new-vehicle price inflation, rising real disposable consumer income, improvement in SA’s political and policy environment, lower interest rates and the maintenance of an investment-grade rating with a stable outlook.”
Exports rose 0.8% in April from a year earlier, from 24,229 to 24,422. Shipments for the first four months of 2018 increased 1.4%, from 94,893 to 96,239.