New-vehicle sales in South Africa could slow to only 495 000 units in 2012, says Econometrix director Tony Twine. That would represent a significant drop from the 572 400 units sold last year, with Twine forecasting that passenger cars will account for around 50 000 units of the almost 80 000-unit decline.

The economist says the “next boom” in vehicle sales will probably materialise in late 2013 as South Africa’s economic growth stabilises after a rather turbulent 2012, carrying over into 2014 and 2015, and then finally losing momentum in 2016.

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

Unless the European economy implodes, it is likely that interest rates will 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 is expected to be 6,2% to 6.3% this year, up from January 2011’s 3.2%, with this trend continuing throughout the year.

The rand is also expected to 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 is that “conditions are almost guaranteed to be tougher in 2012 than in 2011”, says Twine.

Adding to the fall-off in 2012 will be the absence of a peculiar 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, explains Twine, as previous price increases, following rand weakness in 2002 and 2009, managed to build in a cushion for manufacturers, allowing them to soften the 2011 blow to consumers.

Chinese Growth Fuels Truck Demand
The extra-heavy truck market really stood out among 2011’s new-vehicle sales statistics, says 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%, compared with 2010.

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

He says China’s demand for commo- dities, and the country’s subsequent presence in Africa, have fuelled a resources boom, which has sparked a truck boom.

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

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

To illustrate his point, Twine says 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 demand for raw material continue in 2012, the extra- heavy truck market could “have a bumper year”, says Twine.

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