WesBank CEO Chris de Kock delivered the bank’s view of the market and new-vehicle sales forecast at the 2018 SAGMJ Car of the Year banquet in Midrand on Tuesday evening, where he predicted sales of new cars, trucks and light commercial vehicles would end the year at 561 753 units.
There were 557 586 cars, light commercials and trucks sold in South Africa last year, a minor 1.8% increase over 2016 but the first year-on-year growth in four years. The growth was partly attributed to slowing inflation on the back of a stronger rand, as well as a strong contribution by the car rental sector.
“While the recent positive sentiments about South Africa’s economy will impact the automotive industry, this will take time to generate material growth,” said De Kock.
“However, new-vehicle sales are expected to see moderate growth this year. The economic challenges faced in SA are structural in nature, and will take an extended period of time to correct. The positive sentiment brought about by the recent political changes is a good place to start and we are confident that this will lead to greater economic invest and improved growth prospects for the country.”
Dealer sales account for 80% of total sales in SA and are a key indicator of the total market outlook. WesBank expects a modest increase of 3% in the dealer segment, driven mainly by passenger cars sales. This growth will be influenced not only by the improved sentiment, but also a reduction in interest rates and a stronger rand that impacts positively on vehicle price inflation.
WesBank’s prediction is less optimistic than that of the National Association of Automobile Manufacturers of SA (NAAMSA) which recently said it expected this year’s new-car market to improve by around 2% and the light commercial vehicle market by double that percentage.
De Kock said the rental market which accounts for 13% of total sales saw unusually high growth in 2017, which will be tough to match during the coming year.
“Additionally, the ongoing drought in the Western Cape continues to take a toll on the rental market’s growth prospects with the Western Cape province accounting for 40% of South Africa’s tourism rental market. In these challenging conditions, WesBank anticipates a 14.9% decline in rental sales this year,” he concluded