For the first time in four years total vehicle sales in South Africa for the year have gone up with 2017 showing a 1,8% percent improvement over 2016.

The new vehicle industry ended 2017 on a positive note, according to the annual sales data from the National Association of Automobile Manufacturers of South Africa (Naamsa).  Despite December 2017’s year-on-year sales declining 2,4%, the year-to-date new car sales for 2017 still grew 1,8%. In total, 557 586 new vehicles were sold in South Africa during 2017.

“The new vehicle market’s positive performance for the last year was almost exactly in line with our forecast of 1.74% growth,” says Rudolf Mahoney, Head of Brand and Communications, WesBank. “This can be attributed to the Rand being resilient in the face of volatility and the South African economy performing better than anticipated. However, the economy is still underperforming and faces a long road to recovery.”

In the second half of 2017, OEMs were able to stave off price increases as the Rand firmed against foreign currencies. This allowed manufacturers to pass value back to consumers through very attractive marketing incentives when purchasing new vehicles.

WesBank’s data for 2017 also reflected the continued shift back to the new vehicle market, especially when measuring demand through the number of vehicle finance applications received. Demand for new vehicles rose 6,4% in December, while demand for used vehicles slowed 0,2%. Overall, demand for new vehicles grew 3% in 2017, while demand for used vehicles declined 1,5%.

Since the introduction of the Polo and Polo Vivo in 2010, Volkswagen Group South Africa (VWSA) has been passenger market leader every year. The Volkswagen Group ended the year with 80 308  sales giving VWSA a total market share of 21,8%, with the Volkswagen brand achieving 18,9% share in a run out year of its volume models.

“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,” says VWSA Chairman and Managing Director Thomas Schaefer.

“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”,

Volkswagen will be launching the new Polo later this month which will be followed by the Polo Vivo still in this quarter.

According to Naamsa, export sales recorded a decline in December, 2017 and at 17 374 units reflected a fall of 1 333 vehicles or 7,1% compared to the 18 707 vehicles exported during December, 2016.  This was largely attributable to the effect of model run out and new model introduction of the new VW Polo range in 2018.

Annual aggregate annual industry sales by sector, since 2014, were as follows –

Sector	2014	2015	2016	2017	2017 / 2016 % Change
Cars	438 938	412 478	361 264	368 068	+1.9%
Light Commercials	173 492	174 701	159 283	163 346	+2.6%
Medium Commercials	10 780	10 394	8 315	7 785	-6.4%
Heavy Trucks,  Buses	20 534	20 075	18 685	18 387	-1.6%
Total Vehicles	643 744	617 648	547 547	557 586	1.8%

Source:  Lightstone Auto, NAAMSA

Whilst the modest improvement was welcome, the figures should be seen in the context of industry sales 11 years ago when the domestic market recorded an all-time high sales number of 714 314 units of which the new car market had represented 481 558 vehicles.

2017 Vehicle exports represented the third highest annual Industry export figure on record and total vehicle exports at 329 053 units were down on the 344 820 vehicles exported in 2016 – a decline of 15 767 units or a fall of 4,6%.

2017 Industry export sales data, compared to previous years, were as follows –

	2015	2016	2017	2017 / 2016 % Change
Cars	229 723	238 547	221 928	-7.0%
Light Commercials	103 000	105 219	106 126	+0.9%
Trucks & Buses	1 124	1 054	999	-5.2%
Total Exports	333 847	344 820	329 053	-4.6%

Source:  Lightstone Auto, NAAMSA

South African financial markets have reacted positively to the outcome of the December, 2017 ANC elective conference.  However, economic and fiscal policy uncertainty, political challenges, the risk of further credit rating downgrades and increasing geo-political tensions make forecasting difficult.

On the positive side, several recent economic indicators support the view the South African economy is performing better than anticipated despite low levels of business and consumer confidence.  Barring a further credit rating downgrade, an improvement in economic growth from about 1,0% in 2017 to around 1,9% in 2018 remains possible and this would lend support to new vehicle sales in the domestic market.

The substantial improvement in the Reserve Bank’s leading indicator of economic activity heralds improved economic prospects. Also on an encouraging note, the positive global economic environment – with International Monetary Fund projections of 3,7% global expansion – will lend support to industry export sales.

Faster economic growth remains an imperative to address South Africa’s socio-economic challenges and to take pressure off strained public finances and overburdened taxpayers.  In this context, concerted steps are needed by Business, Government and Labour to create a more investor-friendly environment as a means of boosting growth.

NAAMSA anticipates further modest improvement in domestic new vehicle sales during 2018 as well as further growth in vehicle exports and industry production numbers.

The outlook for 2018 in terms of Industry domestic vehicle sales by sector –

Sector	2015	2016	2017	2018 Projected
Cars	412 478	361 264	368 068	375 000
Light Commercials	174 701	159 283	163 346	170 000
Medium Commercials	10 394	8 315	7 785	8 000
Heavy, Extra Heavy, Commercials, Buses	20 075	18 685	18 387	19 000
Total Vehicles	617 648	547 547	557 586	572 000