New vehicle sales in South Africa surged ahead in May, increasing 7.5% to 53 997 units, compared with the same month last year.

Commenting on the statistics, compiled by RGT Smart, the National Association of Automobile Manufacturers of South Africa (Naamsa) says 37 019 new passenger cars were sold in May, a 6.3% gain compared with the same month last year.

Sales of new light commercial vehicles, bakkies and minibuses, at 14 301 units, were 11.1% up.

Sales of medium trucks and big vans were down 0.3% to 961 units, with heavy trucks at 1 716 units, up 8.6%.

New vehicle exports during May, at 26 325 vehicles, jumped 16.5% compared with May last year.

Naamsa says it expects export numbers to continue improving for the rest of the year.

However, the association also warns that the outlook for the local automotive sector for the balance of the year appears less promising than at the beginning of 2013.

“Domestically, expectations of lower gross domestic product growth and above-inflation new vehicle price increases – as a result of the sharply weaker exchange rate and the April increase in vehicle emissions taxes on new cars and certain categories of new light commercials – will contribute to a more difficult trading environment.”

The average transaction value for new cars increased from R203 000 in May 2011 to R207 000 (2.3%) in May 2012, notes WesBank sales and marketing executive head Chris de Kock.

“Then we saw a comparative jump to R232 000 (12.8%) in May 2013, indicating that manufacturers are increasing new car prices more aggressively this year than last year.”

Also commenting on the sales results, Absa vehicle and commercial asset finance head Wessel Steffens says the banking group’s vehicle finance application count in May again “grew significantly”, although the approval rate dropped marginally owing to a decline in the quality of applications.

“The industry is moving to a 72-month finance period as the number of applications in this term category increases each month. “The main driver behind this is affordability, but it has the downside of an ever-increasing average contract period, which will continue to lengthen the [vehicle] replacement cycle,” he adds.

Steffens also notes that entry-level passenger cars and new model releases are expected to be the main contributors to new vehicle sales growth in 2013. New vehicle sales in this segment have shown a 39% increase in the first quarter of 2013 compared with the same period last year.