New-vehicle sales in South Africa will drop by around 12% in 2016, compared with 2015, says First National Bank (FNB) senior industry analyst Jason Muscat.

The same forecast model used to determine this decline suggests that sales in 2017 may drop another 5%, as a worst case scenario, he adds.

The best case scenario would see 2017 sales remain flat, compared with 2016.

This continued decline in sales follows “the erosion of disposable income in South Africa”.

Muscat says FNB believes that South Africa’s economy will grow by around 1% in 2017, following growth of 0.2% in 2016.

The rand should also experience more stability in 2017, provided there is not “too much political noise”.

Political Storms

This said, however, Muscat notes that the movement of the rand, following political blowouts, seems to happen in a narrowing band, perhaps signalling a desensitising to such events.

He adds that “South Africa is not a special snowflake” in terms of political storms, with the general global political arena also in upheaval, as shown by the US Presidential election and the recent Italian referendum, for example.

Ford Motor Company Sub-Saharan Africa president and CEO Jeff Nemeth says he expects a “flat to strengthening rand” in 2017, which should make car imports more affordable.

This should also lead to stable interest rates for 2017.

He expects new-vehicle sales to remain flat next year, or to grow by 1% to 2% if the market positives win out.

Nemeth says South Africa’s new-vehicle market has a dual identity, with the more mature market currently locked in a replacement cycle, which is acting as a counterbalance to a declining emerging market.

Decline Ford Motor Company of Southern Africa marketing, sales and service director Neale Hill notes that sales of new vehicles in South Africa has declined by 10.7% from January to November, compared with the same period last year.

Car sales are down 12.4% year to date, light commercial vehicles 7.1%, medium commercial vehicles 18.9%, with heavy commercial vehicles down 6.8%.

Another notable decline is sales to government, which are down a whopping 56.3% year to date, to 10 930 units.

The only vehicle segment that has seen growth in 2016 is small sports utility vehicles, such as the Ford EcoSport.