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SA vehicle market to remain positive in 2018
Community Coordinator

South Africa’s vehicle market continues to show positive growth, with sales expected to reach 2% year on year in 2018 at 568 000 vehicles.


The market is largely being driven by the lower and medium segments, says Cyril Zhungu, Head of Dealer Automotive Retail at Standard Bank. Derick de Vries, Head of VAF and Fleet Management, shares that medium and large commercial vehicle sales will continue to be driven by business sentiment.


These optimistic opinions follow the release of Naamsa’s statistics on Friday, 1 June. Vehicle sales at 42 984 had shown an improvement of 1 022 vehicles, or 2.4%, compared to 41 962 vehicles sold in May last year. May 2018 aggregate export sales at 32 731 vehicles reflected an improvement of 3 982 units, a gain of 13.9% compared to the 28 749 vehicles exported during the same time in 2017.


According to Mr Zhungu, consumers have been able to deleverage their debt in the 10 years since the financial crisis of 2008/9, and debt-to-income has dropped over the same period. At the same time, affordability has improved. Combined with lower price inflation, many South Africans have the confidence to continue participating in the credit market. This confidence has encouraged higher dealer sales, but it’s also notable that exports grew at 13.9% as demand remained strong from export markets.


Stable inflation, low interest rates, and sales incentives from manufacturers, together with improved confidence, underpins the overall positive outlook.


The Naamsa data showed that sales in the low-volume medium and heavy-truck segments of the industry had rebounded strongly with a gain of 17.6% year-on-year. Heavy trucks and busses showed a sharp improvement of 21.1% compared to the corresponding month last year.


Light commercial vehicles saw growth of 3.2% year-on-year, which is in line with expectations and confidence in the sector. However, Mr Zhungu cautions that the recent increase in oil price is a downside risk to the outlook, given the impact on motoring costs to the average consumer.


“Furthermore, the drift in cost inflation caused by oil prices, among others, will filter through into transport costs, which translates into a higher overall cost of living,” he says.