Vehicle and asset finance provider WesBank expects new-vehicle sales to grow by 1.74% in 2017.

The company was almost spot-on in its March 2016 prediction that last year’s sales would decline by 12%, with the actual number recorded at the end of 2016 a drop of 11.4%.

WesBank believes the passenger car market will grow by 1.29% to 365 926 units in 2017, with light commercial vehicle sales to increase by 3.32% to 164 488 units, compared with 2016 numbers.

The bad news, however, is that consumer buying – dealer sales – is expected to remain weak.

Dealer sales are expected to end 2017 0.5% weaker, with 2% and 4.1% declines in passenger and commercial vehicle dealer sales respectively expected.

WesBank forecasts sales growth to be driven by government buying, as there are a number of large tenders set to be awarded in the coming months.

Also, tourism is expected to drive sales in the rental market.

New-vehicle buying occurs in four channels – dealer, rental, government and single-unit purchases for dealership use.

Another bit of bad news is that truck sales are expected to drop by 1.57% in 2016 to 26 586 units.

“Businesses lack the positive sentiment to spend capital on growth and expansion efforts,” says WesBank brand and communications head Rudolf Mahoney.

“Most of the trucks bought now are replacement units, not new purchases.”

He says the new-truck market may show some improvement in 2018, commensurate with a recovery in economic growth.

Mahoney adds that it is also clear that consumer spending remains under strain.

WesBank is confident that South Africa’s economy will see positive but subdued growth going into 2018.

Inflation is expected to settle within the upper part of the South African Reserve Bank’s target band, which will result in the current repo rate remaining stable at 7%.

The rand has recovered from its lows in 2016, aided by political and economic policies in global markets, and should hold its ground through to 2018.