A slump in the global economy, as well as a local economy offering “little in the way of economic stimulation”,  should result in a 1% decline in new-vehicle sales in South Africa in 2019, says vehicle finance group WesBank.

“It is quite comforting to know that we were very close with our 2018 forecast,” says WesBank CEO Chris de Kock.

“Our prediction for total new-vehicle sales was 1.7% lower than the market’s actual performance.”

The South African new-vehicle market dropped by 1% in 2018, to 552 190 units, down from the 557 703 units sold in 2017.

“Looking at the 2018 performance, we know [the drop] was the result of a sharp sales decline in the passenger segment,” notes De Kock. “This was starkly evident in the dealer channel, where the majority of buying activity takes place.”

WesBank believes South African consumers have become more prudent with their personal financial planning, thanks to erratic fuel prices and high inflation – both dictated by the exchange rate.

This trend is evident in new-vehicle buying patterns, with consumers either delaying purchases or buying downwards, moving out of the premium car market and into the more affordable mainstream segments.

In an effort to curb inflation, the Reserve Bank has responded by slowly increasing interest rates, which has put further pressure on household budgets.

WesBank anticipates further minor interest rate increases in the medium term – a factor that will influence both consumer and business confidence.

Dealers and vehicle manufacturers are also no longer able to offer marketing incentives to aid sales.

WesBank says politics will, most likely, also play a role in the performance of vehicle sales in 2019, as tenders for fleet contracts will be put on hold in the run-up to national elections in May.

Business should only return to normal levels in the second half of the year.

On the plus side, it is expected that more lenient visa rules for tourists, as well as an improvement in drought conditions in Cape Town, should boost tourism and, subsequently, also the car rental market.

Despite this, WesBank predicts that overall sales of new-passenger cars will decline by 1.5% in 2019.

Sales of heavy trucks are expected to decline by 4.4% in 2019.

Some good news is that WesBank expects 0.3% growth in light commercial vehicle sales and a 1.7% jump in medium commercial vehicle sales.

* De Kock delivered the bank’s yearly sales prediction at the 2019 Cars.co.za Consumer Awards held earlier this month in Gauteng.