March vehicle sales increase by 24.6%
Local vehicle sales rose by 24.6% to 936 units in March, following an increase of 12.7% to 751 units seen in February, the National Association of Automobile Manufacturers South Africa announced.
The monthly increase in vehicle sales came from an upsurge in light commercial vehicles and passenger vehicles by 37.6% and 19.2% to 483 units and 422 units, respectively, in March 2019.
Simonis Storm Securities attributes this gradual uptick in vehicle sales to the arrival of the Toyota Corolla Hatch that hit the market in February 2019, adding that the new Toyota RAV4, which arrived in South Africa during March 2019, will potentially form part of the Namibian vehicle sales in the coming months.
“This will keep new vehicle sales slightly elevated. In addition, Ford also introduced new models to the market (Ford Fiesta, Ford Fora and the Ecosport). However, we are concerned that the new arrivals will find it difficult to penetrate the market as consumer spending deteriorates especially on luxury goods. Creative marketing techniques are embraced by the dealerships, with Ford running a ‘truck month’ special coupled with a ‘demo clearance’ at prime less 1% and 30% balloon payments,” Indileni Nanghonga, Analyst at Simonis Storm said.
Furthermore, the government in the 2019/20 budget has revised down the budget allocation for vehicles from N$11.9 million previously expected to N$10 million. However, the vehicle budget allocation is expected to increase in 2020/21 to N$13 million compared to a previous estimates of N$10 million.
Nanghonga stressed that the slight uptick in the allocation in 2020 could bring respite in the vehicle industry but it remains well below the N$22.2 million government allocation seen in 2017, adding that tough times will continue to prevail for the vehicle industry.
Caption: The increase in vehicle sales is attributed to the arrival of the Toyota Corolla Hatch that hit the market in February 2019.