Total new vehicle sales (as reported by NAAMSA today) recorded a positive growth in June of 12.6% y/y. During the first half of 2011, total domestic sales were 15.7% ahead of the corresponding six months in 2010, which is an impressive performance considering the strong rebound in sales during 2010. In total, vehicle sales are still well below their previous high, but on a clear upward trend.
Passenger car sales rose by 17.3%y/y in June, which is largely in-line with the overall trend in 2011. In contrast, sales of light commercial vehicles, bakkies and minibuses decreased by 1.8%m/m. The sale of medium and heavy trucks reflected a mixed performance and recorded a small decline in the case of medium commercial vehicles, compared with a gain of 49.2% m/m in the case of heavy trucks and buses. Exports of South African-produced motor vehicles were up 23.7% m/m.
First half performance can be summarised as follows: Passenger vehicle sales +19.8%y/y; Light commercial vehicle sales +5.2%y/y; and Total vehicle sales: +15.7%y/y.
We expect consumer demand for durable goods to come under some pressure over the next year, considering the growing pressure on consumer discretionary income as a result of administered price increases (electricity etc). The proposed introduction of freeway toll charges in Gauteng will also impact negatively on consumer’s discretionary income.
Typically, during this phase of the business cycle, consumers start to utilize credit more fully in order to ‘afford’ to purchase both discretionary and non-discretionary items. However, growth in credit demand remains relatively muted (see last week’s note on SA credit growth).
Sales of commercial vehicles are driven more by trends in infrastructural development as well as growth in the mining and agricultural sectors. The construction/infrastructural sectors remains under pressure, but hopefully we will start to see an improvement in 2012/2013.
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