Strong growth in new vehicle sales in July

Year-to-date sales were up 11.6% compared with the corresponding months last year‚ it said. Month-on-month sales grew just more than 4%.

Such growth suggests consumer demand for credit is strong‚ that it remains a "buyer's market" and that rental companies foresee a bumper tourist season.

An additional 8381 new vehicles were sold last month compared with July last year‚ with the total industry selling 54 067 new vehicles.

Exports from SA's motor manufacturers also grew significantly‚ with 11.6% more new vehicles‚ and a total of 27 625‚ leaving SA's shores last month than in the same month last year.

Remarkable performance

Naamsa said on Thursday that the industry had performed "remarkably well".

"A number of factors were expected to support domestic sales and these included historically low interest rates‚ further improvement in vehicle affordability in real terms and improving demand for credit‚" the association said.

However‚ as a result of supply constraints following the earthquake and tsunami disaster in Japan a year ago‚ such strong numbers needed to be treated with some caution‚ Wessel Steffens‚ head of Absa's Vehicle and Commercial Asset unit‚ said on Thursday.

"The impact of the tsunami a year ago on stock availability is seen in stronger-than-expected year-on-year growth and is expected to moderate in the second half to anticipated levels‚" said Steffens.

Nonetheless‚ strong industry-wide sales growth suggested the industry would outperform predictions made at the start of the year.

"The year-on-year growth we predicted at the beginning of the year was 6% and growth is now at 11.6%. This performance‚ together with the continued positive environment leading to a sustained buyers' market‚ has led us to believe that our prediction will need to be adjusted positively by between 2% and 3%‚" De Kock said.

Beware; a slowdown is coming

De Kock warned‚ however‚ that a slowdown of growth was inevitable as the year wore on. "The base effects of last year's excellent growth‚ especially in the last five months of last year‚ will make it difficult for the market to continue to grow at the levels seen in the last few months‚" he cautioned.

Naamsa's Nico Vermeulen said that despite the tsunami effect‚ the industry's performance was "very encouraging" in a time characterised by "mixed signals".

"There's evidence of a slowing economy and some sectors are under pressure‚ but PMI isn't too bad and consumer durable goods are doing really well‚" he said.

Vermeulen said an "ultra-competitive market" had made it possible for the industry to "exceed expectations". He also cited low interest rates‚ vehicle inflation significantly under CPI and good finance offers from dealers as being a "virtuous circle".

Rental fleet sales strong in July

Commentators pointed out that rental fleet sales were strong last month‚ as rental companies tended to start "fleeting up" at this time of year. Of last month's sales 12% were to rental companies‚ which would go some way to explaining VW's exceptionally strong sales of its Polo Vivo‚ with nearly 3500 sold in the month.

VW spokesman Matt Gennrich said earlier on Thursday that there "was definitely a rental portion" to the sales. "One in six industry sales was to a rental company‚" he said. He also added that the firm had responded with financing deals‚ marketing and PR to counter the potential threat posed by the segment's latest competitor‚ the Toyota Etios.

Naamsa confirmed that 16.5% of all new cars sold last month were to rental firms.

Gennrich said that while the company would still export 108 000 cars this year‚ the situation in Europe remained "very concerning".