After spending three years in negative territory, South African new-vehicle sales finally managed to inch forward in 2017, growing by 1.8% to 557 586 units, compared with 2016.

New-vehicle sales dropped by 11.4% in 2016, 4.1% in 2015 and 0.7% in 2014.

Data released by the Department of Trade and Industry earlier this month showed that new passenger car sales increased by 1.9% in 2017, compared with 2016, to 368 068 units.

Sales of new bakkies, vans and minibuses increased by 2.6% to 163 346 units.

The South African new-truck market, however, failed to deliver the same cheer, with medium truck sales down 6.4%, compared with 2016, to 7 785 units, and heavy truck sales declining 1.6% to 18 387 units.

The National Association of Automobile Manufacturers of South Africa (Naamsa) describes 2017’s gains as “encouraging, given subdued economic growth, pressure on consumers’ disposable income and low levels of consumer and business confidence”.

The association says the marginal decline seen in interest rates in July boosted the market for the remainder of the year.

Other positives were the continued strong contribution from the car rental sector, which accounted for roughly 16% of new-car sales during 2017, as well as the number of sales incentives on offer from local vehicle manufacturers and importers.

Exports, Production Down
New-vehicle exports from South Africa, at 329 053 units, were down 4.6% on the 344 820 vehicles exported in 2016.

Domestic production declined from 600 007 units in 2016 to 588 000 units.

Improvement Expected in 2018
Assuming continued improvement in the global economy, Naamsa expects 2018 exports to improve by around 11% to reach 366 000 units.

Domestic production is anticipated to increase by 8% to 635 000 units.

Naamsa expects South African new-vehicle sales to grow by 2.6% in 2018 to reach 572 000 units. Growth is expected in all segments of the market.

“Barring a further credit rating downgrade, an improvement in economic growth from about 1% in 2017 to around 1.9% in 2018 remains possible,” notes Naamsa.

“This would lend support to new-vehicle sales in the domestic market.

“Also, on an encouraging note, the positive global economic environment – with International Monetary Fund projections of 3.7% global expansion – will lend support to industry export sales.”

The association warns, however, that business, government and labour have to make a concerted effort to create a more investor-friendly environment in South Africa in an effort to boost economic growth.