New vehicle sales in South Africa could end the year at around 495 000 units, said Econometrix director Tony Twine on Thursday.

This rather dismal figure would be a massive drop from the 572 400 units sold last year, with passenger cars expected to be responsible for around 50 000 units of the almost 80 000 unit decline in Twine’s 2012 forecast.

Addressing journalists at a breakfast hosted by Ford in Johannesburg, the economist said the “next boom” in vehicle sales would materialise in late 2013 as South Africa’s economic growth stabilised after a rather turbulent 2012, carrying over into 2014, 2015, and then finally losing momentum in 2016.

Twine’s forecast stemmed from the fact that the “whole [vehicle] market will be under volume pressure during 2012”.

Unless the European economy implodes, it was likely that interest rates would rise rather than fall during 2012, with hikes likely in the second half of the year.

Lower interest rates normally stimulate vehicle buying.

Inflation in January was expected to be around 6.2% to 6.3% this year, up from last year January’s 3.2%, with this trend continuing throughout the year.

The rand would also weaken further against the dollar and the Euro (but not the yen), which could see vehicle prices increase more quickly than in 2011.

With household expenditure then under increasing pressure during 2012, it would feed pressure into the business sector.

What this means for the automotive market was that “conditions are almost guaranteed to be tougher in 2012 than in 2011”, said Twine.

Adding to the fall-off in 2012 would be the absence of a perculiar phenomenon in 2011, namely pre-emptive buying of around 15 000 units towards the end of the year as consumers anticipated a big hike in car prices as the rand nose-dived against major currencies.

However, this steep price hike did not materialise, explained Twine, as previous price increases, following rand weakness in 2002 and 2009, managed to built in a cushion for manufacturers, allowing them to soften the 2011 blow to consumers.

CHINESE GROWTH FUELLING SA TRUCK DEMAND

The extra-heavy truck market really stood out among 2011’s new vehicle sales statistics, said Twine.
 
Despite slowing down somewhat later in the year as “suppliers did not anticipate the demand”, the sale of extra-heavy trucks, typically used in long-haul, mining and construction applications, grew by 35.4% over 2010.

“This is due to what is happening north of the Limpopo,” said Twine. “The Chinese have arrived in Africa in a big way.”

He said China’s demand for commodities, and the country’s subsequent presence in Africa, had fuelled a resources boom, which had sparked a truck boom.

Twine said neighbouring countries had seen more than 6% gross domestic product growth last year, as opposed to the 3.2% growth in South Africa.

“Our neighours are using our trucks, our roads and our ports to move their goods.”

To illustrate his point Twine said that inland-bound truck traffic through the Mooi River toll plaza on the N3 grew by between 30% and 40% during most of 2011.

Should China’s demands for raw material continue in 2012, the extra-heavy truck market could “have a bumper year”, said Twine.

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