Growth in the first quarter of 2012 has been driven largely by consumer demand. Picture: Gallo Images
The South African automotive industry has continued the positive momentum of last year well into 2012, with a total increase in new vehicle sales of 6.48% for the first quarter of the year compared with the same period a year earlier.
However, this marks a sharp decline on the 23.4% growth achieved in the first quarter of 2011 and the 15.6% growth recorded across the whole of last year.
In March, overall vehicle sales registered modest gains, compared to the same period a year ago, the National Association of Automobile Manufacturers of SA (Naamsa) said.
Aggregate industry sales improved by 2552 units or 4.8 percent to 56,110 vehicles, compared to the 53,558 units sold in March last year. However, new car sales in particular showed relatively strong gains, it said in a statement.
2011 is still a better year:
According to the South African automotive industry, while growth remains positive, it does fall short of the strong numbers recorded in 2011.
“If one looks at the year-on-year growth recorded for the first three months of 2012, we can see a clear trend that the market is tightening. However, the fact that we are continuing to see growth in vehicle sales, given the comparative high base of last year, should be viewed positively by the industry.” says Chris De Kock, Executive Head of Sales and Marketing at WesBank.
He says the growth in the first quarter of 2012 has been driven largely by consumer demand.
“Passenger sales have risen 8.22% for the first three months of the year, ahead of the average trend in the industry. Conversely, sales of light commercial vehicles (LCV’s) have underperformed the market average, with growth of just 2.35%.” Chris De Kock said.
He says that while factors contributing towards market growth have not changed, such as the ongoing low interest rate environment, new models and promotional offers by manufacturers, the increasing financial pressure on the consumer is likely to have an effect on vehicle sales demand in the future.
“There is certainly a sense of pessimism regarding the longevity of consumer demand, as a result of disposable income coming under pressure, low wage increases and the impact of rising inflation. This is only going to be exacerbated with the recent steep fuel price increase, the hike in electricity tariffs and the introduction of toll fees in Gauteng.”
De Kock says WesBank data further supports the view that growth is decelerating, with a 6.2% increase in credit applications in the first quarter of 2012 compared with a 12.6% growth in applications achieved in the same period a year earlier. Compared with the previous three months (Q4 2011), there was a 3.2% decline in the number of applications.
“Much of the pent-up demand for passenger vehicles has been met in the last couple of years and the average replacement cycle has already improved significantly, from 44 to 39 months on new car contracts. There was also a big replacement cycle of LCV’s over the last two years, and the small to medium sector hasn’t yet taken off as much as we would have liked it to.”
“This reflects WesBank’s forecast for single digit growth throughout the current year of around 6% for passenger vehicles and 4% for light commercial vehicles,” De Kock said.