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The SA Daily 19 April 2018

Vehicle sales to trend up

  • Naamsa’s total new passenger vehicle sales disappointed in Q1:18 with a decline of 3.4% y/y, from an increase in 4.7% y/y in Q4:17. The trend cycle (total passenger vehicle sales trend) declined because purchasing activity was subdued mainly due to slowing demand from exports, the government and rental companies. Exports suffered partly from the stronger rand encroaching on competitiveness and also due to delays in exports at the BMW Rosslyn plant (switching from the 3 Series model to the X3 model) in March. But, losses were somewhat capped due to the benign global growth environment as well as the introduction of the new VW Polo in February, which somewhat supported car exports in Q1:18.
  • Nevertheless, excluding exports, the trend cycle is still rising predominantly due to the recovery in domestic demand. Domestic demand will be, in our view, aided by the moderating inflation profile (currently at 7-year lows) and real wages growing around 2%. This, coupled with lower interest rates and a stronger, more anchored, rand, underpins our expectation for steady household expenditure (HCE) – particularly in durable goods which are more rand- and interest-rate-sensitive (see Q1:18 passenger vehicle sales of 18 April, by Siphamandla Mkhwanazi).

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