March shows growth in new vehicle sales

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This follows a minor decline of 0.1% in February and growth of 3.7% in January. Year-to-date, new vehicle sales are up 1.9%.

In an about-turn for the industry, this growth was driven by sales through the dealer channel – where consumers are active. Conversely, government and rental channel sales saw sharp declines of 22.8% and 22.5%, respectively. Passenger car sales through the dealer channel grew 14.3%, year-on-year, with light commercial vehicle (LCV) sales seeing marginal growth of 0.8% off an already strong base.

“March’s sales performance is indicative of the positive sentiment in the economy during the past month. There were a few contributing factors, including a strong rand and falling fuel prices,” said Rudolf Mahoney, head of brand and communications at WesBank. “Consumers had many reasons to feel confident enough to spend money, and this is immediately evident in the new vehicle sales.”

Demand for vehicle finance

This sales performance and consumer confidence is reflected in the demand for vehicle finance. WesBank’s internal data shows growth of 8% for new vehicle finance, compared to March last year. This past month also saw the average new vehicle price reach an all-time high, representing an 8% increase year-on-year.

Used vehicle sales

The strong demand for new vehicles was not at the expense of used vehicle sales, where application volumes were 13.4% higher than the same time last year. Consumers shopping in the used market during March were also spending 8.6% more on average, than last year.

“However, this positivity is going to be short-lived. The current political climate has introduced massive uncertainty in all South African markets. Both business and consumer confidence have been shaken, and this will filter through to the ratings agencies as well,” said Mahoney. “The rand’s sharp decline has already wiped out the benefit of lower fuel prices, and if it continues to deteriorate, new vehicle prices will follow suit.”