'Take pressure off overburdened taxpayers' - What 2018 could mean for SA car sales

Johannesburg - Despite a decline in vehicle sales in December, overall 2017 saw the first year-on-year increase, albeit a modest 1.8%, in four years.

With political issues, credit rating downgrades and economic factors, what's the outlook for vehicle sales in 2018?

Naamsa gives us its predication for the SA automotive industry.

2017 in review   

Naamsa said: "South African financial markets have reacted positively to the outcome of the 2017 ANC elective conference in December. However, economic and fiscal policy uncertainty, political challenges, the risk of further credit rating downgrades and increasing geo-political tensions make forecasting difficult.

"On the positive side, several recent economic indicators support the view that the South African
economy is performing better than anticipated despite low levels of business and consumer confidence.

What about SA's credit rating?

Naamsa said: "Barring a further credit rating downgrade, an improvement in economic growth from about 1.0% in 2017 to around 1.9% in 2018 remains possible and this would lend support to new vehicle sales in the domestic market. 

"The substantial improvement in the Reserve Bank’s leading indicator of economic activity heralds improved economic prospects. Also on an encouraging note, the positive global economic environment – with International Monetary Fund projections of 3.7% global expansion – will lend support to industry export sales."

What about the economy?

Naamsa said: "Faster economic growth remains an imperative to address South Africa’s socio-economic challenges and to take pressure off strained public finances and overburdened taxpayers. In this context, concerted steps are needed by Business, Government and Labour to create a more investor-friendly environment as a means of boosting growth."

Will sales improve in 2018?

The organisation said: "Naamsa anticipates further modest improvement in domestic new vehicle sales during 2018 as well as further growth in vehicle exports and industry production numbers."

2018 SA vehicle sales outlook:

Naamsa said: "Taking into account the time effect of various new model introductions, the new car market should improve during 2018 by around 2.0% and the light commercial vehicle market by double that percentage.

"Factoring in the expected improvement in exports, domestic production of motor vehicles in South Africa was expected to show an increase from 588 000 vehicles produced in 2017 to close on 635 000 vehicles in 2018 – an improvement in vehicle production of about 8.0% This figure could prove conservative if vehicle exports expand more than currently anticipated."