Car sales rise 26.6% in January
New vehicle sales got off to an impressive start to the new year, with new car sales rising 26.6% to 30,037 units from 23,732 units sold in January 2021.
Overall, total new vehicle sales rose 19.5% year-on-year to 41,382 units, according to figures released Tuesday by the Naamsa Automobile Business Council.
Azar Jammine, chief economist at Econometrix, admitted he did not expect an improvement of this magnitude in the new-vehicle market in January.
“It’s been a very good month and suggests that there is some momentum in the economy in the short term which is helping it [the new vehicle market] do very well,” he said.
Jammine said there was likely a continuation of the downward buying trend in the new-vehicle market, but despite that, it’s a good sign for the economy in the near term at least.
This came after the release earlier in the day of the latest Absa Purchasing Managers’ Index (PMI), which was also stronger than expected, he said.
The seasonally adjusted index rose to 57.1 index points in January to recover from the loss of momentum and fell to 54.1 in December 2021.
The Bureau of Economic Research, which compiles the index, said the current PMI level is in line with November 2021 but above the average recorded in the fourth quarter of 2021 and reflects a strong start to the year for the manufacturing sector.
Jammine said these first two economic numbers released this year for January “are both very positive.”
“The importance of this figure [new vehicle sales] is that this is the first concrete evidence of what has happened in the economy this year,” he said.
“He has some resilience and in the short term it’s certainly not catastrophic.”
Jammine said the January new-vehicle sales numbers unfortunately don’t say too much about the long-term economy.
Unless the government addresses structural problems in the economy – such as corruption, state capture, lack of investment in infrastructure, education, labor market, spectrum, electricity and public enterprises – the country “will fall back into a very difficult situation”. low growth environment.
“But the momentum for recovery from the Covid-19 pandemic is still there. [in the short term],” he said.
Sales of new light commercial vehicles, bakkies and minibuses rose 3.8% year-on-year to 9,629 units in January and sales of heavy trucks and buses rose 9.6% to 1,251 units, while sales of medium commercial vehicles fell 4.3% to 465 units. units.
National Automobile Dealers’ Association (NADA) President Mark Dommisse was not surprised by the strength of the new vehicle market.
If we annualize the total monthly sales of 41,383 in January, we end up with a figure that is probably lower than the market forecast.
“I was not surprised [by the strength of the market] because I think South Africa took a big break in December and consumers invested their money in other things.
“The car-buying public is investing their money in vacations when no one has taken a vacation for two years.
“With this in mind, further shortages in key model ranges due to the [computer] chip supply shortages, I think that was a good number,” he said.
Corné Venter, CEO of Motus Retail and Rental SA, part of the JSE-listed Motus automotive group, said the number of new vehicle unit sales for January was in line with their expectations given the current inventory constraints. and supply chain disruptions.
Venter said the same factors also led to low car rental numbers, with some local production lost in January due to component shortages and other factors.
However, Venter said this lost production would in all likelihood be made up “over the next month, putting it back in the hands of local consumers.”
Venter said recent interest rate hikes have also had a negative impact on consumer confidence.
“We are currently seeing full-year unit sales between 500,000 and 525,000 units subject to inventory constraints easing,” he said.
Total new vehicle sales increased 22.1% year-on-year to 464,122 units in 2021, from 380,206 units sold in 2020.
The upward trend is expected to continue
Mikel Mabasa, CEO of automotive business consultancy Naamsa, said the new-vehicle market started the year on a very positive note, continuing its gradual recovery towards pre-Covid-19 levels.
In line with the country’s moderate economic growth forecast for 2022, the new vehicle market is expected to continue its gradual recovery to pre-Covid-19 levels, albeit at a slower pace, he said.
Mabasa said the trend of the new vehicle market over the next three years is expected to be upward, in close correlation with the national economic growth outlook forecast by the National Treasury, averaging 1.7% for 2022, 2023 and 2024.
Exports of locally produced vehicles fell 9.3% in January to 19,089 units from the 21,051 vehicles exported in January 2021.
“Vehicle export outlook for 2022, although declining during the month, remains positive, in line with favorable economic and market conditions overseas as well as further introductions of new models by leading vehicle exporters in the country in 2022,” Mabasa said.
Econometrix forecasts new vehicle sales growth of between 3% and 5% for 2022.
Dommisse estimates that the new vehicle market should “comfortably be above 500,000 units and perhaps between 510,000 and 520,000” units this year.
“That’s a reasonable number considering that [car] rental will take more cars and South Africa wakes up [and] the world economy.
“We will have more tourism. It will be a turbulent year with rising interest rates and inflation. It’s going to be a challenge but I think we’ll be comfortably over 500,000.
“Last year we had two lockdowns. We came out of a fairly reasonable lockdown in January with beaches closed and various restrictions in place during the second wave.
“Then the third wave in June/July plus the riots was a killer. We lost a significant amount of sales. If that doesn’t happen, and we don’t have a big swing this year like that, we should easily having sustainable sales of 41,000 new vehicles per month, no problem,” he said.