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Cape Town - "The weaker trend in domestic new vehicle sales in recent months had continued during February with all market segments, including exports, registering year on year declines," reports Naamsa.

The organisation reports 46 347 units sold in February, a decline of 1854 vehicles or -3.8% from the 48 201 vehicles sold in February 2017. 

February 2018 export sales, at 27 437 vehicles, registered a fall of 1 681 units or a decline of 5.8% compared to the 29 154 vehicles exported in February 2017. Naamsa said: "Exports for the first two months of the year remained 2% above the corresponding two months in 2017."

The market

Overall, out of the total reported Industry sales of 46 347 vehicles, an estimated 38 920 units or 84% represented dealer sales, an estimated 9.7% represented sales to the rental Industry, 3.7% to industry corporate fleets and 2.6% to government.

New car market

The February 2018 new car market held up relatively better than the commercial vehicle segments; At 31 200 units, the passenger car market registered a marginal fall of 123 cars or -0.4% compared to the 31 323 new cars sold in February 2017.

Naamsa said: "Due to seasonal factors, the car rental industry contribution had declined but still accounted for about 13.9% of new car sales in February 2018." 

Domestic sales of new light commercial vehicles (bakkies and mini buses) reflected a continued  drop. At 13 212 units LCVs registered a fall of 1410 vehicles or a decline of 9.6% compared to the 14 622 units sold during the corresponding month last year. 

Why the decline?

Naamsa said: "The lower commercial vehicle sales figures reflected subdued investment sentiment in the economy. Recent improvement in the Reserve Bank’s leading indicator and further recent increases in the Purchasing Manager’s Index, anticipated an improved outlook for the economy over the medium term. 

"The considerable appreciation in the value of the Rand would also reduce inflationary pressures. Recent positive political developments and improved business confidence should also serve to support higher economic growth in 2018 and provided South Africa was able to avoid a further credit ratings downgrade at the end of the first quarter of 2018, actual economic growth could well surpass current expectations.

"In such an environment, economic growth could well recover to a level above 1.5% in 2018. Replacement demand and reduced vehicle price inflation, as a result of the stronger Rand, should support new vehicle sales in the months ahead. 

Budget speech

The 2018 February budget had, Naamsa said, reiterated government’s commitment to fiscal consolidation, limiting government expenditure and ensuring that State Owned Enterprises would be subjected to strict governance and operational standards. 

Naamsa said: "However, the increase in Value Added Tax, vehicle emissions taxes, the substantially higher-advalorem duty for premium luxury vehicles with retail selling prices in excess of R900 000 as well as the substantial increase in the fuel levy would impact on consumers’ disposable income and could impact new vehicle sales from April 2018 onwards. 

"Hopefully, this would be outweighed by a higher economic growth rate. New vehicle exports in 2018 should reflect fairly strong upward momentum on the back of improved growth in the global economy. An increase of around 10% in vehicle export sales volumes was possible in 2018."

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