New vehicle sales in South Africa surged 18.3% in July compared with the same month last year. Year-to-date sales were up 11.6% compared with 2011.
Despite this good news for the local automotive industry, there were some concerns about the pace of growth, and how South Africans may be financing their new purchases.
Ford Motor Company of Southern Africa (FMCSA) marketing, sales and service VP Dean Stoneley said on Thursday that the local arm of the US manufacturer was “a little bit confounded by this growth”.
He said it was possible the local market could see surprising double-digit growth for the year, compared with most early 2012 forecasts pitched at around 5% to 7.5% growth, in light of a continuing global economic crisis, especially prevalent in Europe.
MMI Holdings senior economist Sheshi Kaniki said he had also been surprised by the strength in vehicles sales in 2012, especially considering factors such as lower consumer confidence, the moderation of wage growth, and the continued increase in the number of credit-active consumers with impaired records.
“Maybe it speaks to the cultural values in the South African society,” he postulated at a media breakfast in Johannesburg.
Cars are important to South Africans as a status symbol, to “say we have arrived”. Kaniki said he was often surprised by the financial decisions households would take to ensure they had the car they wanted.
He also questioned whether conflicting economic data would not perhaps indicate that consumers were securing their finance for new vehicles through unsecured lending once banks refused them finance.
FMCSA indicated that around 25% of customers made cash purchases in 2011, but that this had grown to 30% in 2012. Although there were a variety of mechanisms available to fuel this, it could be indicative of people borrowing on their bonds or securing personal loans to purchase new vehicles.
The National Association of Automobile Manufacturers of South Africa (Naamsa) said on Thursday that new vehicle sales reached 54 067 units in July.
New passenger car sales improved 18.2%, to 37 844 units, in July compared with the same month last year.
Sales of new light commercial vehicles, bakkies and minibuses were up 20.8%, with medium trucks up 7.9% and heavy trucks up 9%.
Exports of South African-produced motor vehicles, at 27 625 units, were up 11.6% on July last year.