14 Jan 19

South Africa vehicle sales down 1% in 2018

Despite increases in medium- and heavy-commercial vehicle sales in South Africa last year, overall vehicle sales were down, due to disappointing car and LCV sales, NAAMSA reports. 

Stronger sales of medium and heavy commercial vehicles “suggest an improvement in capital investment sentiment in South Africa”, says the National Association of Automobile Manufacturers of South Africa (NAAMSA).

Negative picture
However, the overall picture is negative. Last year, 552,190 personal cars and commercial vehicles were sold in South Africa (pictured: Johannesburg), 5,513 units (-1%) less than in 2017.

True, sales of heavy commercial vehicles rose last year by 6.5% to 19,579 units, and those of medium commercial vehicles by 0.3% to 7,913 units. But the much bigger category of light commercial vehicles (LCVs) dropped by 3,865 units (-2.4%) to 159,452. 

Together, this equates to an overall decline of commercial-vehicle sales by 2.1%, compared to 2017. The slighter decline (-0.8%) in the much larger personal car category represents a drop by 2,868 units to 365,246 units sold.

Strong contribution
“The fall in new-car and LCV sales occurred despite the strong contribution by the car rental sector during the year, attractive sales incentives by automotive companies and an improvement in new-vehicle affordability in real terms”, the NAAMSA statement continued.

The automotive sector contributes around 7.7% to South Africa’s GDP. Its real-time decline, which has persisted over a number of years despite last year’s modest rebound (+1.9%), has a major impact on the country’s overall economic fortunes. Back in 2014, overall vehicle sales were at 643,744 units, 16.5% higher than in 2018.

Business confidence
According to NAAMSA, the latest decline reflects not just the weak macro-economic environment (less than 1% growth in 2018 vs. 5.6% growth in 2006), pressure on disposable incomes and fragile business and consumer confidence, but also last November’s 0.25% increase in interest rates, impacting negatively on vehicle financing.   

And indeed, the figures for December show a substantial decrease for both LCVs (-7%, year-on-year) and medium commercial vehicles (-10.1%). On the other hand, the sale of heavy commercial vehicles rose by 13.8% compared to December 2017, and new-car sales declined by just 0.2%.

Brighter note
On a brighter note, exports for December rose by a whopping 56.3% to 31,437 units – a major contributor to the industry’s overall annual record.  

Of the total reported industry sales of 39,984 units last December 85% were dealer sales, 9.3% represented sales to the rental industry, 3.2% went to government fleets and 2.5% to industry corporate fleets. 

For next year, NAAMSA predicts a modest rise in overall sales, to 558,000 (+1%), with the biggest relative gain to be made by the LCV section (+1.6%, to 162,000 units).

Authored by: Frank Jacobs