ECONOMIC COMMENTARY Economics South Africa 01 November 2017 Vehicle Sales Total sales growth continues to points towards a rebound off a low base Total new vehicle sales increased to 51 037 units in October, the highest volume since November 2015. Sales increased by 4,6% y-o-y, marking the fifth consecutive month of growth. Passenger vehicles sales were boosted by rental industry purchases, while commercial sales moderated after four months of improvement. Export volumes also moderated from a monthly record in September. Vehicle sales are likely to pick up in the months ahead off a low base, with the interest rate cut adding some boost, but the trend will be subdued as the adverse political and subdued economic climates dampen the recovery, while the rand s renewed weakness is likely to lift prices. Vehicle sales figures continue rebound off a low base. However, the numbers still do not indicate a strong upturn and are unlikely to have policy consequences. In the short term renewed pressure on the rand, higher oil prices and an uncertain political climate have reduced the scope for further easing. We still forecast moderate interest rate decreases in the first half of 2018, but these remain highly dependent on the rand trajectory and its impact on inflation. Table 1 : Vehicle sales & exports October M-o-m % September Nedbank forecast Market forecast Total 4,6 0,8 6,9 4,3 n/a Passenger 7,9 4,9 5,9 Commercial Total exports -2,1-8,3, including GWMSA Comment -7,3-22,3 9,1 10,9 Group Economic Unit Isaac Matshego +27 11 295 6451 IsaacMat@nedbank.co.za Dennis Dykes +27 11 295 6435 DennisD@nedbank.co.za 135 Rivonia Road Campus, 135 Rivonia Road, Sandton, 2196, South Africa http://nedbankgroup.co.za New vehicle sales continued to show signs of improvement in October, increasing for the fifth month in succession, the longest run of growth since the second half of 2014. That upward trend, however, was disrupted as the overall economy was hurt by labour instability and as the drought hit the economy. This time around the vehicle market rebound faces risks mainly from renewed rand weakness following on policy and political missteps, which is likely to pressure prices. Sales totalling 51 037 marked the highest monthly volume in almost two years. Passenger vehicle sales were boosted mainly by purchases by the rental industry, which accounted for 26,1% of the total in October. The commercial market contracted by 2,1% after several months of good gains. Export volumes were dragged lower primarily by a 15,1% decline in passenger vehicles shipped.
Chart 1 : Total sales of new vehicles Chart 2 : Vehicle exports Outlook The vehicle market is likely to show further signs of rebound off a low base over the coming months but growth is unlikely to rise strongly as household income growth remains subdued and debt levels elevated. The commercial sector will remain subject to subdued domestic fixed investment trends, which will not rebound while business confidence is low. Exports will continue to benefit from stronger demand in key markets, particularly in Europe. The National Association of Automobile Manufacturers (NAAMSA) still projects overall sales growth of around 1,5% for 2017 as a whole. Implications Vehicle sales figures continue to rebound off a low base. However, the numbers still do not indicate a strong upturn and are unlikely to have policy consequences. In the short term renewed pressure on the rand, higher oil prices and an uncertain political climate have reduced the scope for further easing. We still forecast moderate interest rate decreases in the first half of 2018, but this remains highly dependent on the rand trajectory and its impact on inflation. Economic Commentary 01 November 2017 Page 2 of 6
Table 2 : Breakdown of vehicle sales Total Passenger Commercial 2015 617648-4.1 412478-6.0 205157-0.1 2016 547442-11.4 361273-12.4 186368-9.2 Q1 15 160029-1.1-0.1 108818-0.7-0.5 52379 0.3 3.2 Q2 15 142551-10.9-3.8 93662-13.9-5.5 48444-7.5-1.4 Q3 15 160463 12.6-7.8 108775 16.1-10.0 51618 6.6-3.0 Q4 15 154735-3.6-4.4 102019-6.2-6.9 52716 2.1 1.0 Q1 16 144172-6.8-9.9 98377-3.6-9.6 45791-13.1-12.6 Q2 16 128130-11.1-10.1 82027-16.6-12.4 46103 0.7-4.8 Q3 16 138361 8.0-13.8 91327 11.3-16.0 47034 2.0-8.9 Q4 16 136763-1.2-11.6 89323-2.2-12.4 47440 0.9-10.0 Q1 17 146951 7.4 1.9 99228 11.1 0.9 47723 0.6 4.2 Q2 17 122033-17.0-4.8 77386-22.0-5.7 44647-6.4-3.2 Q3 17 146509 20.1 5.9 96632 24.9 5.8 49877 11.7 6.0 Jan-15 52228 1.5-1.4 37208 4.1-3.0 15020-4.2 3.1 Feb-15 52385 0.3 1.2 36142-2.9 5.1 17438 16.1 0.2 Mar-15 55416 5.8 0.0 35468-1.9-3.2 19921 14.2 6.0 Apr-15 44469-19.8-3.4 30026-15.3-2.4 14443-27.5-5.2 May-15 47832 7.6-3.3 30716 2.3-6.8 16671 15.4 1.2 Jun-15 50250 5.1-4.8 32920 7.2-6.9 17330 4.0-0.5 Jul-15 54105 7.7-6.1 36527 11.0-8.7 17578 1.4-0.2 Aug-15 51055-5.6-8.2 34923-4.4-7.7 16062-8.6-9.6 Sep-15 55303 8.3-9.1 37325 6.9-13.1 17978 11.9 0.9 Oct-15 54239-1.9-8.6 36176-3.1-10.9 18063 0.5-3.5 Nov-15 51338-5.3 0.6 32882-9.1-1.1 18456 2.2 3.7 Dec-15 49158-4.2-4.5 32961 0.2-7.8 16197-12.2 3.3 Jan-16 48514-1.3-7.1 35133 6.6-5.6 13381-17.4-10.9 Feb-16 48144-0.8-8.1 32854-6.5-9.1 15290 14.3-12.3 Mar-16 47514-1.3-14.3 30390-7.5-14.3 17120 12.0-14.1 Apr-16 40348-15.1-9.3 26012-14.4-13.4 14336-16.3-0.7 May-16 42912 6.4-10.3 26980 3.7-12.2 15932 11.1-4.4 Jun-16 44870 4.6-10.7 29035 7.6-11.8 15835-0.6-8.6 Jul-16 44873 0.0-17.1 29019-0.1-20.6 15854 0.1-9.8 Aug-16 46131 2.8-9.6 30507 5.1-12.6 15624-1.5-2.7 Sep-16 47357 2.7-14.4 31801 4.2-14.8 15556-0.4-13.5 Oct-16 48782 3.0-10.1 32722 2.9-9.5 16060 3.2-11.1 Nov-16 46342-5.0-9.7 28270-13.6-14.0 18072 12.5-2.1 Dec-16 41639-10.1-15.3 28331 0.2-14.0 13308-26.4-17.8 Jan-17 50320 20.8 3.7 36793 29.9 4.7 13527 1.6 1.1 Feb-17 48097-4.4-0.1 31401-14.7-4.4 16696 23.4 9.2 Mar-17 48534 0.9 2.1 31034-1.2 2.1 17500 4.8 2.2 Apr-17 34938-28.0-13.4 22447-27.7-13.7 12491-28.6-12.9 May-17 41763 19.5-2.7 26309 17.2-2.5 15454 23.7-3.0 Jun-17 45332 8.5 1.0 28630 8.8-1.4 16702 8.1 5.5 Jul-17 46668 2.9 4.0 30785 7.5 6.1 15883-4.9 0.2 Aug-17 49197 5.4 6.6 32169 4.5 5.4 17028 7.2 9.0 Sep-17 50644 2.9 6.9 33678 4.7 5.9 16966-0.4 9.1 Oct-17 51037 0.8 4.6 35316 4.9 7.9 15721-7.3-2.1 Economic Commentary 01 November 2017 Page 3 of 6
Table 3 : Breakdown of commercial vehicle sales Light Medium Heavy commercials commercials commercials 2015 174701 0.5 10144-5.4 20075-2.2 2016 159128-8.9 8210-19.1 18525-7.7 Q1 15 52379 2.7 3.8 2481-17.8-8.3 4725-9.1 3.7 Q2 15 48444-8.7 0.0 2414-2.7-5.0 4790 1.4-10.2 Q3 15 51618 6.4-2.5 2581 6.9-6.4 5168 7.9-5.2 Q4 15 52716 1.2 0.9 2913 12.9-3.4 5392 4.3 3.8 Q1 16 45791-10.7-12.2 1903-34.7-23.3 4246-21.3-10.1 Q2 16 46103-0.7-4.5 1972 3.6-18.3 4751 11.9-0.8 Q3 16 47034 1.5-8.9 2225 12.8-13.8 4854 2.2-6.1 Q4 16 47440 1.5-8.7 2229 0.2-23.5 4674-3.7-13.3 Q1 17 47723 1.9 4.2 1993-10.6 4.7 4423-5.4 4.2 Q2 17 44647-7.2-2.7 1883-5.5-4.5 4434 0.2-6.7 Q3 17 49877 12.4 7.9 1918 1.9-13.8 4858 9.6 0.1 Jan-15 13164 0.4 3.6 629-37.1-18.6 1227-21.8 11.9 Feb-15 15143 15.0 1.8 757 20.3-17.6 1538 25.3-4.5 Mar-15 16866 11.4 5.9 1095 44.6 7.9 1960 27.4 6.1 Apr-15 12210-27.6-5.0 777-29.0-4.7 1456-25.7-7.4 May-15 14199 16.3 2.3 787 1.3-4.0 1685 15.7-5.4 Jun-15 14831 4.5 2.1 850 8.0-6.3 1649-2.1-16.6 Jul-15 15065 1.6 0.6 839-1.3-1.9 1674 1.5-6.3 Aug-15 13682-9.2-8.4 882 5.1-11.9 1498-10.5-18.0 Sep-15 15122 10.5 0.3 860-2.5-4.7 1996 33.2 8.5 Oct-15 15182 0.4-4.0 953 10.8-0.4 1928-3.4-1.3 Nov-15 15484 2.0 2.7 1021 7.1-3.7 1951 1.2 16.5 Dec-15 13745-11.2 4.8 939-8.0-6.1 1513-22.5-3.6 Jan-16 11790-14.2-10.4 508-45.9-19.2 1083-28.4-11.7 Feb-16 13139 11.4-13.2 650 28.0-14.1 1501 38.6-2.4 Mar-16 14713 12.0-12.8 745 14.6-32.0 1662 10.7-15.2 Apr-16 12217-17.0 0.1 584-21.6-24.8 1535-7.6 5.4 May-16 13620 11.5-4.1 675 15.6-14.2 1637 6.6-2.8 Jun-16 13543-0.6-8.7 713 5.6-16.1 1579-3.5-4.2 Jul-16 13566 0.2-10.0 718 0.7-14.4 1570-0.6-6.2 Aug-16 13386-1.3-2.2 735 2.4-16.7 1503-4.3 0.3 Sep-16 13003-2.9-14.0 772 5.0-10.2 1781 18.5-10.8 Oct-16 13603 4.6-10.4 690-10.6-27.6 1767-0.8-8.4 Nov-16 15631 14.9 0.9 826 19.7-19.1 1615-8.6-17.2 Dec-16 11303-27.7-17.8 713-13.7-24.1 1292-20.0-14.6 Jan-17 11982 6.0 1.6 489-31.4-3.7 1056-18.3-2.5 Feb-17 14443 20.5 9.9 671 37.2 3.2 1582 49.8 5.4 Mar-17 14882 3.0 1.1 833 24.1 11.8 1785 12.8 7.4 Apr-17 10601-28.8-13.2 558-33.0-4.5 1332-25.4-13.2 May-17 13415 26.5-1.5 583 4.5-13.6 1456 9.3-11.1 Jun-17 14314 6.7 5.7 742 27.3 4.1 1646 13.0 4.2 Jul-17 13769-3.8 1.5 598-19.4-16.7 1516-7.9-3.4 Aug-17 14822 7.6 10.7 632 5.7-14.0 1574 3.8 4.7 Sep-17 14510-2.1 11.6 688 8.9-10.9 1768 12.3-0.7 Oct-17 13376-7.8-1.7 668-2.9-3.2 1677-5.1-5.1 Economic Commentary 01 November 2017 Page 4 of 6
Table 4 : Breakdown of vehicle exports Total Passenger Commercial 2015 333847 20.6 229723 46.7 104124-13.5 2016 344822 3.3 238567 3.8 106255 2.0 Q1 15 80506-1.9 33.3 53377 9.9 80.8 27129-19.1-12.1 Q2 15 88435 9.8 58.2 58807 10.2 96.2 29628 9.2 14.3 Q3 15 91624 3.6 16.7 66511 13.1 37.1 24474-17.4-18.5 Q4 15 73278-20.0-10.7 53674-19.3 10.6 19604-19.9-41.5 Q1 16 70044-4.4-13.0 49878-7.1-6.6 20166 2.9-25.7 Q2 16 97653 39.4 10.4 68473 37.3 16.4 29180 44.7-1.5 Q3 16 96152-1.5 4.9 66912-2.3 0.6 29240 0.2 19.5 Q4 16 84659-12.0 15.5 53314-20.3-0.7 31345 7.2 59.9 Q1 17 70683-16.5 0.9 46204-13.3-7.4 24479-21.9 21.4 Q2 17 84573 19.7-13.4 59830 29.5-12.6 24743 1.1-15.2 Q3 17 100995 19.4 5.0 70401 17.7 5.2 30594 23.6 4.6 Jan-15 16709-23.5 20.7 11105-7.7 84.4 5604-42.8-28.4 Feb-15 29776 78.2 35.7 18724 68.6 95.3 11052 97.2-10.5 Mar-15 34021 14.3 38.3 23548 25.8 69.3 10473-5.2-2.1 Apr-15 23602-30.6 40.5 16682-29.2 89.6 6920-33.9-13.5 May-15 33414 41.6 114.3 22022 32.0 201.3 11392 64.6 37.5 Jun-15 31419-6.0 33.7 20103-8.7 45.0 11316-0.7 17.5 Jul-15 28358-9.7 24.7 19475-3.1 52.7 8883-21.5-11.0 Aug-15 28112-0.9 12.5 20513 5.3 22.8 7599-14.5-8.2 Sep-15 35154 25.0 14.2 23877 16.4 25.4 11277 48.4-4.0 Oct-15 27719-21.1-13.9 22121-7.4 23.4 5598-50.4-60.8 Nov-15 28113 1.4 0.2 21344-3.5 14.8 6769 20.9-28.5 Dec-15 17446-37.9-20.1 10209-52.2-15.2 7237 6.9-26.1 Jan-16 13001-25.5-22.2 7543-26.1-32.1 5458-24.6-2.6 Feb-16 29323 125.5-1.5 22095 192.9 18.0 7228 32.4-34.6 Mar-16 27720-5.5-18.5 20240-8.4-14.0 7480 3.5-28.6 Apr-16 32832 18.4 39.1 23440 15.8 40.5 9392 25.6 35.7 May-16 33619 2.4 0.6 22695-3.2 3.1 10924 16.3-4.1 Jun-16 31202-7.2-0.7 22338-1.6 11.1 8864-18.9-21.7 Jul-16 29030-7.0 2.4 20954-6.2 7.6 8076-8.9-9.1 Aug-16 34358 18.4 22.2 23169 10.6 12.9 11189 38.5 47.2 Sep-16 32764-4.6-6.8 22789-1.6-4.6 9975-10.8-11.5 Oct-16 30773-6.1 11.0 21011-7.8-5.0 9762-2.1 74.4 Nov-16 31488 2.3 12.0 20703-1.5-3.0 10785 10.5 59.3 Dec-16 22398-28.9 28.4 11600-44.0 13.6 10798 0.1 49.2 Jan-17 11651-48.0-10.4 4982-57.1-34.0 6669-38.2 22.2 Feb-17 29153 150.2-0.6 21265 326.8-3.8 7888 18.3 9.1 Mar-17 29879 2.5 7.8 19957-6.2-1.4 9922 25.8 32.6 Apr-17 24230-18.9-26.2 17155-14.0-26.8 7075-28.7-24.7 May-17 28748 18.6-14.5 20909 21.9-7.9 7839 10.8-28.2 Jun-17 31595 9.9 1.3 21766 4.1-2.6 9829 25.4 10.9 Jul-17 34723 9.9 19.6 24666 13.3 17.7 10057 2.3 24.5 Aug-17 29931-13.8-12.9 23000-6.8-0.7 6931-31.1-38.1 Sep-17 36341 21.4 10.9 22735-1.2-0.2 13606 96.3 36.4 Oct-17 28229-22.3-8.3 17845-21.5-15.1 10384-23.7 6.4 Economic Commentary 01 November 2017 Page 5 of 6
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