Good news as market set to grow after tumultuous time, Naamsa forecasts
Bullish market and economy prospects, new model introductions and the completion of a significant realignment in the vehicle brand space has shifted Nelson Mandela Bay’s automotive industry into high gear for this year.
Coming off a weak December retail sales month and a tumultuous automotive year which saw the exit of General Motors South Africa (GMSA) and a number of brands from the country, the National Association of Automobile Manufacturers of South Africa (Naamsa) this week projected significant growth in vehicle production, exports and domestic new vehicle sales.
Despite depressed trading last month – which, among other economic factors, Naamsa attributed to model run-outs ahead of new model introductions, it reported a 1.8% year-on-year improvement in sales volumes for the first time in four years.
“The improvement, due to modest gains in new car and light commercial vehicle sales, was encouraging, given subdued economic growth, pressure on consumers’ disposable income and low levels of consumer and business confidence,” Naamsa said.
It said July’s marginal interest rate cut had contributed positively.
Naamsa said annual total industry new vehicle sales for 2014 through to last year were 643 744, 617 648, 547 547 and 557 586 units respectively.
Citing positive factors such as the outcome of the recent ANC elective conference, indications that the economy is performing better than anticipated and economic growth projections of around 1.9% this year, Naamsa forecast annual, total new vehicle sales to increase to 572 000 by year end.
Taking new model introductions into account, Naamsa estimates the new car market will grow by 2% and the new light commercial vehicle market by 4%.
“Factoring in the expected improvements in exports, domestic production of vehicles is expected to show an increase from 588 000 units produced in 2017 to close on 635 000 in 2018, an improvement in vehicle production of about 8%,” it said.
“This figure could prove conservative if vehicle exports expand more than anticipated.”
Uitenhage-based Volkswagen Group South Africa, which has led the national passenger market since introducing the Polo and Polo Vivo in 2010, said it had ended last year with 80 308 sales, giving VW a total market share of 21.8%, with the Volkswagen brand itself achieving 18.9% share in a run out-year of its volume models.
The Volkswagen brand on its own was the car market leader.
VW spokesman Matt Gennrich said its Audi brand had improved its year-on-year share by 1.2% despite very tough trading conditions in the premium market and delivered a passenger market share of 2.9%, placing the brand in third place in the premium market with a total share of 18.7%.
Group chairman and managing director Thomas Schaefer said: “The Polo Vivo and Polo remained the first- and second-best-selling passenger cars in 2017, which is also for the seventh consecutive year – this is an incredible achievement for the Volkswagen brand considering that we effectively ran out of supply in December of the key models, which is illustrated by the unusually low 14.8% market share we achieved in December.
“I am delighted by the performance of both the Volkswagen and Audi brands in 2017 and know that we will do even better in 2018.”
The new Polo will be launched later this month, while the new Polo Vivo will be introduced later in the first quarter.
Williams Hunt Port Elizabeth dealer principal Trevor Villet was confident about the future of both the Opel and Isuzu brands, which Williams Hunt has retained in the wake of GMSA’s exit.
“The dealership networks of both brands have been rationalised and there will now be around 35 dealerships nationally for Opel, some of them stand-alone, and 89 for Isuzu, also with stand-along dealerships.”
Villet said he anticipated growth in the light commercial vehicle segment in particular.
Cyril Zhungu, who heads Standard Bank’s dealer automotive retail division, echoed the general outlook, saying projections of 1.9% economic growth this year boded well for the automotive industry.
“In addition, we anticipate a stable inflation and interest rate environment, which are another two factors critical to the industry,” he said.
He said he had high hopes for Opel as it entered the market as a stand-alone brand and equally high hopes for Isuzu, based on the strong and loyal customer base the brand enjoyed.
“With the good recovery experienced in the agricultural sector, there is a positive outlook for Isuzu, as there is for the light commercial segment as a whole,” Zhungu said.
“With the sales ratio between new and used vehicles being around two to one, we may see some change to that ratio going forward, obviously dependent on what happens in the new car market.
“New model introductions by the likes of Volkswagen will also be impacting the performance of the sector this year,” he said, concluding that early indications were of an exciting year for the motor industry.