2 August 2012

South Africa: July Vehicle Sales Show Solid 18.3 Percent Growth

Pretoria — July vehicle sales showed solid gains growing by 18.3% year-on-year to 54 067 vehicles, the National Association of Automobile Manufacturers of South Africa (Naamsa) said.

"The July new vehicle sales reflected another encouraging performance with sales in all the major segments registering solid gains compared to the corresponding month last year," said Naamsa on Thursday.

Additionally, the total domestic sales for the seven months of 2012 were11.6% ahead of the corresponding seven months in 2011.

In July, aggregate industry new car sales remained strong and at 37 844 units, including Mercedes-Benz South Africa (MBSA) reflected an improvement of 18.2% or 5 817 units compared to the 32 027 new cars sold during July 2011. MBSA provides a single total sales number for passenger cars, commercial vehicles and export sales.

The year to date new car sales were 12.7% ahead of the corresponding seven months of 2011 while the daily selling rate in July had remained at five year high levels. Support from car rental companies showed strong demand in the new car market. The car rental industry accounted for 16.5% of total sales with the car rental companies' contribution expected to remain high over the next few months as the car rental industry continued to re-fleet.

Sales of industry new light commercial vehicles, bakkies and mini buses reflected strong growth and at 13 781 units reflected a 20.8 % increase compared to the 11 411 light commercial vehicle sales during the corresponding month last year. Meanwhile the sale of vehicles in the medium and heavy truck segments of the industry at an estimated 823 and 1619 units respectively recorded an increase of 60 units or 7.9% in the case of medium commercial vehicles and a rise of 9% or 134 units in the case of heavy trucks and buses compared to July 2011.

Exports of South African produced motor vehicles (including MBSA export sales data) at 27 625 vehicles had registered an 11.6% improvement compared to the 24 763 vehicles exported in July 2011.

"The momentum of industry export sales should improve further over the balance of the year as various vehicle export programmes were ramped up, particularly exports of light commercial vehicles were expected to increase substantially," noted the association.

The automotive sector continued to perform remarkably well despite prospects of further slowing in the domestic economy, said the association. Historically low interest rates, further improvement in vehicle affordability in real terms, improving demand for credit by both households and business is expected to support domestic sales.

"The recent 0.5% reduction in interest rates should also underpin sales of consumer durable products, particularly new motor vehicles. The highly competitive trading environment, attractive incentives and new model introductions would also support demand. In terms of domestic sales, the industry remained on track during 2012 for growth of around 10%."

For future export sales uncertainty prevailed regarding the potential impact of the recession in Europe and softer growth in other international markets.

Standard Bank said: "We maintain that the risks to our outlook for the remainder of the year are to the downside and expect a slowdown following the seasonal rental demand boost. The market is likely to register 10% growth for 2012."

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