Bakkies remain SA’s most popular vehicle despite spiralling fuel costs
Car buyers are becoming more "cost-savvy" as spiralling fuel prices distort the traditional cost of vehicle ownership, says Ghana Msibi, sales and marketing head at finance house WesBank.
The South African pump prices of petrol and diesel are expected to hit record levels later this week, due to stronger international oil prices. The effect will be to accelerate the market shift towards smaller, fuel-efficient cars, says Msibi. "Consumers are more informed about the real cost of ownership."
That is not immediately apparent in May’s vehicle sales figures, published Friday by the Department of Trade and Industry. Two bakkies, the Toyota Hilux and Ford Ranger, remain SA’s most popular vehicles by a considerable distance. Their customer base, however, includes agriculture and commerce.
In the car market, new versions of the Volkswagen Polo and Vivo have put plenty of daylight between them and their nearest competitor, the Toyota Corolla.
Truck sales finally showed some fight in May, after a disappointing start to the year. Sales of light commercial vehicles rose 3.2% from May 2017, medium commercials 17.6%, heavy trucks 6.1% and extra-heavies 23.9%.
Car sales, usually the growth driver, managed only a 0.7% improvement, from 26,382 to 26,561. As a result, the overall new-vehicle market grew a modest 2.4%, from 41,962 to 42,984.
The National Association of Automobile Manufacturers of SA (Naamsa), says commercial vehicle sales suggest "the return of positive investment sentiment and business confidence". However, Standard Bank fleet management head Derick de Vries says it is too early to draw conclusions from one positive performance.
"Let’s see this repeated for two or three more months and then we can start talking about trends," he says. "Given the weak state of the truck market, it takes only one big fleet transaction to make a big difference to the total numbers."
He adds that if Public Enterprises Minister Pravin Gordhan succeeds in reining in spending by state-owned enterprises, that could put a brake on their vehicle purchases and on those of their private-sector suppliers.
May’s sales figures were published on Friday by the Department of Trade and Industry. They show that over the first five months of 2018, sales of all categories of new vehicles were down 1.6% compared with a year earlier: from 224,333 to 220,783. De Vries still thinks the full-year 2018 market could grow 2%. WesBank and Naamsa are going for 3%. Naamsa attributes its optimism to "continued moderation in new-vehicle price inflation, the improvement in SA’s political and policy environment, the March 2018 reduction in interest rates and unchanged international credit ratings".
Exports of South African vehicles grew by 13.9% in May, to 32,731 from 28,749 a year earlier. With BMW SA ramping up production of its new, export-focused X3 vehicle, most analysts expect further improvements in coming months. Naamsa, however, warns that the latest, US-driven wave of trade protectionism could yet have an impact on export demand.