Why new-vehicle sales offer precious little to get excited about
Department of trade and industry figures reveal new sales totalled 51,866, a 1.7% improvement on October 2017 and the best monthly figure since October 2015
Motor companies may be celebrating October’s new-vehicle sales, which hit their highest monthly level for three years, but there is precious little for consumers to get excited about, Derick de Vries, Standard Bank’s head of vehicle and asset finance, said Thursday.
Vehicle rental companies, restocking their fleets ahead of the year-end holidays, accounted for 28.7% of car sales and 20.2% of all vehicles.
Private sales through dealerships were actually down. “I expect more of the same in November,” said De Vries, “with more strong rental demand and more pressure for consumers.”
I don’t think full-year sales will show an improvement on 2017.Derick de Vries
Standard Bank’s head of vehicle and asset finance
Nico Vermeulen, director of the National Association of Automobile Manufacturers of SA (Naamsa), said: “The economy continues to experience difficult conditions and consumers’ disposable income remain under pressure. Economic indicators suggest that business conditions will probably remain difficult over the short term.”
Figures released on Thursday by the department of trade & industry show that domestic new-vehicle sales totalled 51,866 in October, a 1.7% improvement on the corresponding month of 2017 and the best monthly figure since October 2015.
However, the market for the year as a whole remains down. Aggregate sales for the first 10 months of 2018, at 464,742, were 0.5% behind the same stage of 2017.
“I don’t think full-year sales will show an improvement on 2017,” De Vries said.
Commercial vehicles were the main reason for October’s improvement. Car sales were down — to 35,050 from 35,308 a year earlier — but light, medium and heavy commercials all boasted healthy gains.
For the year so far, car sales lag 2017 by 0.3%. Vehicle exports boasted a 21% improvement in October — 34,134 against 28,233 a year earlier.
That has almost closed the gap on 2017: exports for the first 10 months of 2018, at 284,145, were only 0.1% behind last year’s 284,461 at the same stage.
The comparison is slightly distorted by the fact that at this time last year, Volkswagen SA and BMW SA were both running down local and export production in preparation for the launch of new products.
Both companies are now back to full production.
“The momentum of export sales has increased over the past few months and, taking into account relatively strong order books reported by most vehicle exporters, exports should improve further and reflect strong upward momentum in 2019 and subsequent years,” said Vermeulen.