South Africa’s new-vehicle industry is forecast to grow by 0.75% in 2018 compared with last year, says vehicle finance provider WesBank.
WesBank CEO Chris de Kock delivered the bank’s view on the market at the 2018 Car of the Year awards held on Tuesday, in Gauteng.
“While the recent positive sentiments about South Africa’s economy will impact the automotive industry, it will take time to generate material growth,” he noted.
“The economic challenges faced in South Africa are structural in nature and will take an extended period of time to correct.
“The positive sentiment brought about by the recent political changes is a good place to start and we are confident that this will lead to greater economic investment and improved growth prospects for the country.”
Dealer sales accounted for 80% of total sales in South Africa in 2017 and are a key indicator of the total market outlook.
WesBank expects a modest increase of 3% in the dealer segment in 2018, driven mainly by new passenger car sales.
This growth will be influenced not only by the improved sentiment, but also a reduction in interest rates and a stronger rand, which impacts positively on vehicle price inflation.
The rental car market accounted for 13% of total sales in 2017, showing “unusually high growth”.
De Kock said it would be tough to match this growth rate during the coming year. The ongoing drought in the Western Cape was expected to continue taking its toll on the rental market’s growth prospects, with the province accounting, on average, for 40% of South Africa’s tourism rental market.
Taking these challenging conditions into account, WesBank anticipates a 14.9% decline in rental sales this year.
WesBank expects economic growth of 1.8% in 2018, with inflation at 5.4%. Interest rates are expected to decline by 0.25 percentage points. The rand was forecast at R12.80 to the dollar.