Did you buy that new car in March, before VAT, ad valorem and the price increases kicked in? Well, a lot of people did and it certainly boosted the monthly sales figures.
National Association of Automobile Manufacturers of South Africa (Naamsa), the official industry body that aggregates every manufacturer’s sales figures every month, says that the industry sold 49 223 vehicles in March this year.
This means that March sales were 1.1% up on the same month last year and 6% better than in February. While this may sound like small increases, it is quite significant, because March sales are usually slow due to all the public and school holidays.
What is equally impressive is the fact that most of the sales (90.2%) were made through the dealer channel. The dealer channel is usually a good proxy for private buyer sales (as opposed to sales to government or vehicle rental companies), which means that the growth in sales in March was in most part thanks to private buyers.
Naamsa and other industry experts reckon that the growth in sales was due to the expected increase in taxes and levies, which took effect in April. These include the increase of 1 percentage point in VAT and the increase in ad valorem taxes, which are particularly painful for more expensive cars.
Unlike changes in the interest rate, which may take three or more months to really have an impact on vehicle sales, a change in taxes normally has an effect shortly before they are due to kick in, and after that people normally forget about it completely.
Car prices also increased in April because the government increased its tax on exhaust emissions. Some manufacturers show this as a separate cost and do not advertise it as part of the vehicle price, but others simply add it to the advertised sales price.
Lastly, many manufacturers snuck in additional vehicle price increases in April, because it is often better to hide increases alongside other, regulated price increases, than to raise prices in a quiet month when there would be more attention paid it.
As always, the passenger vehicle market represented the bulk of vehicle sales with 32 176 units sold in March. This segment grew by 3.7% over March last year, which helped to lift overall sales in the other large segment – light commercial vehicles and bakkies.
Volkswagen (6 991 units) remains the market leader in passenger vehicles, and its sales were no doubt helped by a lot of interest in the new VW Polo. VW was followed by Toyota (5 261 units) and Hyundai (2 762 units).
In the second largest market segment – bakkies and light commercial vehicles – sales dropped by 2.3% to 14 701 units in March. Toyota is the leader in this segment, with the Hilux (3 825 units) and the Ses’fikile taxi and Quantum (1 540 units). They are being chased hard by Nissan (2 999 units, including the NP200, Hardbody and Navara) and the Ford Ranger (2 753 units).
Overall, Toyota is the market leader with total sales of 11 378 units, followed by Volkswagen (7 541), Ford (5 595), Nissan (5 410) and Hyundai (3 065 units).
In contrast to local vehicle sales, the export of South African vehicles dropped by 2 421 cars or 8%. Fortunately, there is no reason for alarm. BMW has just changed production from its 3 Series to the new X3 and will soon start exporting vehicles again. Once that happens, vehicle exports will recover.
Interestingly, Mercedes-Benz, which produces the C Class in East London, is South Africa’s export leader. It shipped 9 255 new C Class models to countries across the globe in March, compared to 6 689 Polos from VW and 6 173 Rangers by Ford.
So, what does the rest of the year hold? Many companies expect the market to remain flat or only marginally better than last year, which means that we should reach around 560 000 units for the full year for an overall increase of around 1%.
