Chris de Kock
The local new vehicle market will contract by around 0.6% in 2014 compared with last year, says WesBank CEO Chris de Kock.
The new car market will most likely shrink 2% to 441 432 units, with bakkies and vans expected to grow 2%, to 172 618 units.
The truck market is forecast to expand by 4%, to 32 183 units.
However, despite the anticipated decline, De Kock does not believe the current downward trend will “be anywhere near as bad” as the recent cycles the South African motor industry has experienced – in particular the recession and credit crunch of 2008.
“CPI [Inflation] is likely to peak at around 7% in this cycle, meaning interest rates should not have to be hiked to the same extent as in previous cases, such as when prime reached 23% in 1998.”
This time around the downwards cycle in new vehicle sales is not caused by an inflationary event, but rather a function of the economy rebalancing from consuming or importing, to manufacturing and exporting.
Exports are already showing signs of a recovery and there is every chance that – led by the automotive industry – South African manufacturers can, and will, make the best use of this opportunity to boost export volumes, says De Kock.
It is also a positive that the motor industry should not see any strike action until 2016, as it last year signed a three-year wage deal.
But what about South African consumers? They remain under stress owing to rising inflation, higher interest rates, record fuel prices and e-tolls.
Provided that the interest rate cycle is “reasonably shallow” and the hikes are “introduced slowly and smoothly”, the consumer is in a far better position entering this cycle than in previous cases, says De Kock.
At the same time salary increases are still forecast to run ahead of inflation, resulting in a small growth in disposable income.
According to data released by the National Credit Regulator, there are also a growing number of credit active consumers, which means more people are entering the market looking to purchase vehicles and services.
Risks to WesBank’s 2014 forecast include a weaker rand than anticipated, inflation exceeding 6% for longer than expected, the South African Reserve Bank increasing rates significantly higher and more aggressively than anticipated, and possible political instability.
PORSCHE CAYMAN S IS CAR OF THE YEAR
The WesBank South African Guild of Motoring Journalists Car of the Year was announced on Wednesday night, with the Porsche Cayman S crowned as the winner.
The nine 2013-model finalists were the 2013 Audi A3 Sportback 1.4T FSI Manual; the Jaguar F-TYPE 3.0 V6 S; the Lexus IS 350 F-Sport; the Mercedes-Benz A 45 AMG; the Peugeot 208 GTI; the Porsche Cayman S; the Renault Clio 4 66 kW Turbo Dynamique; the Volkswagen Golf 7 1.4 TSI 90 kW Comfortline DSG; and the Volvo V40 D3 Geartronic Excel.