Economy

SA auto industy 'in growth mode'

7 June 2010

South African new vehicle sales grew by 35% in May compared to the same month last year, suggesting the industry has moved into a growth mode, while export volumes surged 77% as foreign markets recovered from last year's global financial meltdown.

"Aggregate industry sales at 39 176 units had registered an impressive improvement of 35.3% compared to the 28 952 vehicles sold during the corresponding month in 2009," the National Association of Automobile Manufacturers of South Africa (Naamsa) said in a statement last week.

"The exceptional revival in sales of new cars and commercial vehicles since the beginning of the year suggested that the industry had moved into a growth mode."

The association said that though the improvement in May's figure was due to the low sales registered in 2009 because of the global financial meltdown, it was encouraging that aggregate industry sales for the first five months of 2010 remained 24.6% ahead of the first five months of 2009.

In addition, export sales registered exceptional volume growth in May.

'Robust sales'

Of the overall 33 182 industry sales, 28 888 or 87.1% of sales represented dealer/retail sales. The car rental industry represented 4.6%, while 4.7% of the sales represented industry corporate fleet sales. Government accounted for 3.6% of the sales.

"The new car market had performed remarkably well, with the selling rate of new cars per day remaining robust," said Naamsa.

Sales of industry new light commercial vehicles, bakkies and minibuses, at 11 518 units in May, showed an improvement of 2 846 units or 32.8% compared to the 8 672 units of the corresponding month last year.

Medium vehicle and segments sales showed an improvement of 745 and 1 189 units respectively. When coming to heavy trucks and buses, these recorded a gain of 314 units compared to the same time last year.

Vehicle exports surge

South African produced export vehicle sales (24 179) in May 2010 showed an improvement of 77.9% in comparison to the 13 593 vehicles exported during May 2009. The figure was depressed last May due to the global financial meltdown.

"Improved demand internationally for South African produced motor vehicles should support industry export sales going forward."

Naamsa said that the 550-basis-point reduction in interest rates since 2008, along with relatively stable new prices, improvement in loan finance approval rates, and pent-up replacement demand had contributed to the strong recovery of domestic sales.

"Positive factors that would support domestic sales going forward included a gradual improvement in the financial position of consumers, improved consumer sentiment and business confidence, as well as projected further recovery in economic activity levels."

Concerns remain

On the down-side, however, Naamsa said the adverse consequences of recent widespread industrial action, and uncertainty about the sustainability of the global economic recovery, could affect volume growth over the medium term.

Naamsa expects sales for the year to expand by 15%, while exports are expected to grow by 32% - with the higher automotive sector production contributing to the further revival of the South African economy.

SAinfo reporter