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Naamsa Comment on the May, 2017 industry new vehicle sales statistics

Naamsa Comment on the May, 2017 industry new vehicle sales statistics

Commenting on the new vehicle sales statistics for the month of May, 2017 – released today for public consumption on the website of the Department of Trade & Industry – the Association said that new vehicle sales in all segments, had registered declines compared to the corresponding month last year. However, sales of new cars and light commercial vehicles had held up better than expected. In contrast, medium and heavy commercial vehicle sales had registered sharp declines. Whilst new vehicle exports also reflected a fairly substantial year on year decline, this should be seen in the context of the fact that vehicle exports in May last year represented the second highest export number on record.

In the event, May 2017 aggregate new vehicle sales at 41 783 units had decreased by 1 129 units or 2.6% from the 42 912 vehicles sold in May last year. May, 2017 export sales at 29 596 vehicles had registered a fall of 4 023 units which represented a decline of 12.0% compared to the 33 619 vehicles exported in May last year.

Overall, out of the total reported Industry sales of 41 783 vehicles, an estimated 37 686 units or 90.2% represented dealer sales, 5.1% represented sales to the vehicle rental Industry, 3.2% to Industry corporate fleets and 1.5% to government.

The May, 2017 new car market at 26 317 units reflected a fall of 663 cars or a decline of 2.5% compared to the 26 980 new cars sold in May last year. The car rental Industry had accounted for an estimated 7.2% of new car sales in May, 2017. The rental industry share was understated since it excluded estimates for two major manufacturers.

Domestic sales of industry new light commercial vehicles, bakkies and mini buses at 13 410 units during May, 2017 reflected a decline of 210 vehicles or a fall of 1.5% compared to the 13 620 light commercial vehicles sold during the corresponding month last year.

Sales of vehicles in the medium and heavy truck segments of the Industry had recorded fairly sharp falls and at 583 units and 1 473 units, respectively, reflected a decline of 92 vehicles or 13.6% in the case of medium commercial vehicles and, in the case of heavy trucks and buses, a decline of 164 vehicles or a fall of 10.0% compared to the corresponding month last year.

Industry new vehicle exports at 29 596 units exported during May, 2017 reflected a reduction of 4 023 units or a decline of 12.0% compared to the 33 619 vehicles exported in May last year. Vehicle exports in May, 2016 were the second highest monthly export figure on record and therefore represented a relatively high base. The momentum of vehicle exports was expected to improve over the balance of 2017.

Following the modest improvement in new vehicle sales during the first three months of 2017, the outlook for the balance of the year was somewhat uncertain. The current polarised political environment in South Africa, together with prospects of subdued economic growth over the short to medium term, continued to weigh on business confidence and consumer sentiment. Domestic new vehicle sales were closely correlated with the overall performance of the South African economy and confidence levels. At this stage, domestic new vehicle sales for 2017 were likely to be flat at best. However, this was premised on a number of assumptions, including, that South Africa would avoid further credit ratings agencies’ downgrades, that interest rates would not increase over the short to medium term, that economic growth would show modest improvement and that the exchange rate, whilst remaining volatile, was unlikely to depreciate markedly.

Vehicle exports could benefit from expectations of an improvement in global growth to around 3.6% and the momentum of exports was expected to improve over the balance of the year.

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