The State of Affairs, Naamsa Affairs

South African vehicle sales tracked the general economy into the red in 2019, with much of the same expected for the coming year.

The local industry body, Naamsa, reported on Tuesday that total vehicle sales in December recorded an unexpected and welcome jump of 1 678 vehicles or 4.2%, compared with the same month in 2018. While this helped to lift the mood in the industry, it was too little to prevent a general decline in sales for the full year.

Naamsa reports that total industry sales, which include trucks, busses, cars and pick-ups, were down 2.8% or a hefty 15 601 units from the total industry sales in 2018. In hard numbers, the industry sold 536 626 vehicles in 2019, compared with 552 227 vehicles in 2018.

Traditionally, December sales have been considered slightly inaccurate, since many dealers (and even some brands) would ‘bank’ any sales they made beyond their target. These sales are generally only reported in January to help kick-start the sales momentum for the new year. Some buyers often also insist on registering their vehicles only in the new calendar year, thus skewing sales figures and forcing analysts to consider December and January sales together for a better picture of market trends.

In the past month, however, some market watchers believe that the dealers did not bank sales and rather registered each and every sale. With the market contracting further from a poor sales year in 2018, dealers and brands needed to ‘make target’, causing them to register every sale and leading to a jump in December.

In the sales charts, Toyota (10 936 sales) and Volkswagen (6 850 sales) are holding steady at the top. Together, they represent over 42% of the total market (trucks included), which seems to justify the industry’s belief that people opt for well-known brands in tough times and are less keen on trying new, or smaller brands.

The rest of the top five consists of Ford (3 489), Hyundai (2 937) and Nissan, which slipped down to fifth with sales of 2 737 units in December.

For the year ahead, Naamsa believes that we may see as much as a 2% improvement in 2020 and has predicted sales of 549 000 units in the market for this year. While this will return sales to the 2018 mark, it is unlikely to happen given recent economic growth estimates.

With all of 2019 accounted for, Mahindra has emerged as the fastest-growing brand with sales growth of 28.7% for the year. The company sold 416 units in December, bringing it to within fighting distance of Honda. Suzuki (28% growth) lost the top spot by a whisker, while Haval stands a chance of taking top spot in 2020, when it will have multiple years of sales reports to compare.

On the other side of the sales spectrum, Porsche seems to have taken the sports and supercar crown for the year. Unfortunately, it, alongside sister-brands Bentley and Lamborghini, only report an aggregate number and does not specify the various sales for different models.

Anecdotal evidence from the sales floor does suggest that brands such as Porsche, and even more exclusive brands such as Maserati and Bentley, are riding the wave of SUV popularity with models such as the Bentayga, Levante, Cayenne and Macan, which now account for most of their sales.

For the year ahead, Naamsa believes that we may see as much as a 2% improvement in 2020 and has predicted sales of 549 000 units in the market for this year. While this will return sales to the 2018 mark, it is unlikely to happen given recent economic growth estimates.

Naamsa has always contended that new vehicle sales track gross domestic product (GDP) growth. Its historic analyses show that the market for new vehicles declined in years that showed less than 2% growth, while years with GDP growth of more than 2% reported concomitant vehicle sales growth.

The analysis holds true for most of the period from 2013 (the last year that showed significant growth), with a small anomaly in 2017 when sales picked up slightly. Here is a quick list of each year’s sales results and the corresponding GDP growth figure, using data from the World Bank and Naamsa:

Given recent GDP predictions of GDP growth of 1% to 1.5% for the year ahead, it is highly likely that sales will decline further in 2020.

This seems to be the view on many sales floors, but it is an open secret that vehicle brands and the industry body will rather call a market as flat or predict marginal growth, rather than openly state that the market will decline. This is to prevent the sales staff on the dealership floor from being discouraged and losing momentum, creating a self-fulfilling prophecy and perhaps even driving the market further down.