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Car sales start 2015 on a 'mixed note': NAAMSA

FEBRUARY 3, 2015
Car sales start 2015 on a 'mixed note': NAAMSA

New vehicle sales started 2015 on a mixed note, however, short to medium term prospects had turned increasingly positive, Naamsa said on Monday. It added that export sales of new motor vehicles had started the year on a strong note.

“In the event, January 2015 aggregate new vehicle sales at 52 306 units registered a decline of 642 vehicles or a fall of 1.2% compared to the 52 948 vehicles sold in January last year. Sales of light commercials, heavy and extra heavy trucks had recorded noteworthy gains. Moreover, the January 2015 export sales at 16 708 units reflected a substantial improvement of 2 863 vehicles or a gain of 20.7% compared to the 13 845 vehicles exported in January last year,” the association said in a statement.

“Overall, out of the total reported Industry sales of 52 306 vehicles, an estimated 42 845 units or 81.9% represented dealer sales, 11.3% represented sales to the vehicle rental Industry, 4.0% to Industry corporate fleets and 2.8% to government.

“The new car market had experienced some pressure in January 2015 and at 36 982 units reflected a decline of 1 392 units or a fall of 3.6% compared to the 38 374 new cars sold in January last year. The car rental Industry had again made a strong contribution and had accounted for 15.3% of new car sales in January, 2015.”

Naamsa said that the domestic sales of industry new light commercial vehicles, bakkies and mini buses at 13 460 units during January 2015 reflected a gain of 756 units or an improvement of 6.0% compared to the 12 704 light commercial vehicles sold during the corresponding month last year.

“Sales of vehicles in the medium and heavy truck segments of the Industry at 637 units and 1 227 units, respectively, reflected a mixed picture and, in the case of medium commercial vehicles, reflected a decline of 136 units or 17.6% and, in the case of heavy trucks and buses, an improvement of 130 vehicles or a gain of 11.9% - compared to the corresponding month last year,” the association said..

“Industry new vehicle exports during January, 2015 had registered, as expected, strong gains compared to the corresponding month last year. NAAMSA anticipated that on the back of normalised industry production, exports for 2015 would improve by around 15% to a record of about 320 000 vehicles.”

It said that domestically, near term prospects for the new vehicle market had improved on the back of a number of recent positive developments. The latest SA Reserve Bank leading indicator had increased significantly to its highest level in nine months.

“Given the close correlation between new car sales and the leading indicator, this development augured well for vehicle sales in the short to medium term. Furthermore, the substantial rise in the purchasing managers’ index also suggested an improvement in business activity and manufacturing output in South Africa. Thirdly, consumer spending was likely to benefit from the substantial decline in fuel prices over the past six months. Importantly, resultant lower inflationary pressures opened the way for stable interest rates well into 2015,” reported Naamsa.

“As a result of these factors, the outlook for 2015, in terms of new vehicle sales, had improved over the short to medium term and would be reinforced further by expectations of a higher economic growth rate of around 2.3% for the year. However, the one major negative factor revolved around the security and stability in electricity supply.”

It said that the proposed change by the fiscal authorities to the basis of fringe benefit taxation of company cars was expected to result in pre-emptive buying during the balance of February, 2015 to avoid the higher basis of valuation of company cars, for fringe benefit tax purposes, with effect from 1st march, 2015.

“The planned legislative change provided that, instead of basing the taxable value of the private use of a company car on the cost to the employer, the taxable value would instead be based on a higher ‘retail market value’. NAAMSA anticipated that the tax change would result in a further move to the car allowance alternative and that companies might consider purchasing new company cars in advance of the tax change. There would be no impact on current company cars or on vehicles acquired before 28th February, 2015,” Naamsa concluded.