Economy

Rentals, exports drive vehicle sales

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3 November 2010

South African vehicle sales recorded a 22% year-on-year improvement to reach 44 056 units in October, driven by above average export sales and the car rental sector, which contributed a remarkable 25% to sales.

Aggregate industry sales at 44 056 units showed an improvement of 8 004 vehicles, or 22%, in comparison to the 36 052 vehicles sold in October 2009, the National Association of Automobile Manufacturers of South Africa (Naamsa) said on Tuesday.

"Looking specifically at the Naamsa reported new car sales of 24 699 units for October 2010, the contribution by the car rental sector amounted to a remarkable 6 207 new cars or 25.1%," the association said.

Vehicle sales in September 2010 boasted a 16.6% improvement compared to September 2009.

Above average export sales

There was significant recovery in aggregate export sales following widespread industrial action and associated loss of production in the past two months.

For October, new vehicle exports at 27 338 showed an improvement of 6 387 vehicles, or a gain of 30.5%, compared to the 20 951 vehicles that were exported in October 2009. When compared to September's 12 524 vehicles that were exported, the improvement amounted to 14 804 vehicles.

Above average export sales should continue in the next few months over the balance of the year as it was expected that vehicle manufacturers will continue to boost output to make up for lost production in August and September due to the strike in the vehicle and component manufacturing sectors.

There was an improvement of 13.6% in sales of new light commercial vehicles, bakkies and minibuses at 11 251 units in October, in comparison to the 9 902 units that were sold in October last year. Improvement stood at 11.6% for the first 10 months of 2010.

Renewed fixed investment

Medium and heavy truck segments sales in October showed gains at 631 and 1 422 units respectively – an increase of 4 units in medium commercials and 483 units in the case of heavy trucks and buses when compared to the same period last year.

The association said the sales of heavy and extra heavy trucks suggested renewed fixed investment momentum in the economy.

"The six percent decline in interest rates since end 2008, stable new vehicle prices, modest improvement in loan finance approval rates and pent up replacement demand, should continue to support new vehicle sales.

"Certain domestic economic performance indicators such as the Purchasing Managers Index and the Reserve Bank’s leading indicator of economic activity suggested that domestic economic conditions would remain challenging," said Naamsa.

Over the medium term, new vehicle sales would remain a function of the performance of the domestic economy and in the case of export sales, the sustainability of the recovery in the global economy.

Source: BuaNews