SURGING entry-level new car sales, buoyant demand for taxis and light commercial vehicles, and car- hungry rental companies were behind a remarkable 18.3% year-on-year increase in new vehicle sales last month.
The National Association of Automobile Manufacturers of South Africa (Naamsa) said year- to-date sales were up 11.6% compared with the corresponding months last year. Month-on- month sales grew more than 4%.
Such growth suggests consumer demand for credit is strong, that it remains a "buyer’s market” and that rental companies foresee a bumper tourist season.
A total of 8381 additional new vehicles were sold last month compared with July last year, with the total industry selling 54067 new vehicles.
Exports from South Africa’s motor manufacturers also grew significantly, with 11.6% more new vehicles, and a total of 27625 leaving South Africa’s shores last month than in the same month last year.
Naamsa said yesterday the industry had performed remarkably well.
"A number of factors were expected to support domestic sales and these included historically low interest rates, further improvement in vehicle affordability in real terms and improving demand for credit,” it said.
However, as a result of supply constraints following the earthquake and tsunami disaster in Japan a year ago, such strong numbers needed to be treated with some caution, Absa’s vehicle and commercial assets unit head Wessel Steffens said.
"The impact of the tsunami a year ago on stock availability is seen in stronger-than-expected year-on-year growth and is expected to moderate in the second half to anticipated levels,” Steffens said.
Nonetheless, strong industry- wide sales growth suggested the industry would outperform predictions made at the start of the year.
Wesbank’s executive head of sales and marketing, Chris de Kock, said: "The year-on-year growth we predicted at the beginning of the year was 6% and growth is now at 11.6%. This performance, together with the continued positive environment leading to a sustained buyers’ market, has led us to believe our prediction will need to be adjusted positively by [two or three percentage points].”
He warned that a slowdown of growth was inevitable as the year wore on. "The base effects of last year’s excellent growth, especially in the last five months of last year, will make it difficult for the market to continue to grow at the levels seen in the past few months.”
Naamsa’s Nico Vermeulen said despite the tsunami effect, the industry’s performance was very encouraging in a time characterised by mixed signals.
"There is evidence of a slowing economy and some sectors are under pressure, but PMI [the purchasing managers’ index] isn’t too bad and consumer durable goods are doing really well.”
Vermeulen said an ultra-competitive market had made it possible for the industry to exceed expectations. He also cited low interest rates, vehicle inflation significantly below the consumer price index and good finance offers from dealers as being a "virtuous circle”.
Commentators pointed out that rental fleet sales were strong last month, as rental companies tended to start "fleeting up” at this time of year.
Naamsa confirmed that 16.5% of all new cars sold last month were to rental firms, which would go some way to explaining VW’s exceptionally strong sales of its Polo Vivo, with nearly 3500 sales in the month.
VW spokesman Matt Gennrich said there "was definitely a rental portion” to the sales.
"One in six industry sales was to a rental company.”
He said the company had responded with financing deals, marketing and PR to counter the potential threat posed by the segment’s latest competitor, the Toyota Etios.
Gennrich said that while VW would still export 108000 cars this year, the situation in Europe remained "very concerning”.