Domestic new-vehicle sales faced a second month of decline this year, dropping by 3.8% in February, to 46 347 units, compared with the same month last year.

Sales numbers released by the Department of Trade and Industry on Thursday showed that February new-passenger car sales inched lower by 0.4%, to 31 200 units.

Sales of new bakkies, minibuses and vans, at 13 212 units, contracted by 9.6%.

Sales of medium trucks, at 574 units, dropped by 13.4%.

Sales of new heavy trucks and buses dropped by 14.6%, to 1 361 units.

New-vehicle exports from South Africa also moved downwards in February, declining by 5.8%, to 27 437 units.

The National Association of Automobile Manufacturers of South Africa (Naamsa) commented in a statement that improved business confidence and the recent positive political developments seen within the country should support higher economic growth in 2018.

“Provided South Africa is able to avoid a further credit ratings downgrade at the end of the first quarter of 2018, actual economic growth could well surpass current expectations.

“In such an environment, economic growth could well recover to a level above 1.5% in 2018. [Vehicle] replacement demand and reduced vehicle price inflation, as a result of the stronger rand, should support new vehicle sales in the months ahead,” noted the association.

Another positive was that the 2018 Budget had reiterated government’s commitment to fiscal consolidation, limiting government expenditure and ensuring that State-owned enterprises would be subject to strict governance and operational standards.

However, warned Naamsa, the increase in value-added tax, vehicle emission taxes, the substantially higher ad valorem duty for premium luxury vehicles with retail selling prices in excess of R900 000, as well as the substantial increase in the fuel levy, would impact on consumers’ disposable income and could dent new-vehicle sales from April onwards.

“Hopefully, this would be outweighed by a higher economic growth rate.”

The association believed that 2018 new vehicle exports should expand on the back of growth in the global economy. An increase of around 10% in new-vehicle export sales was possible.