NAAMSA vehicle sales report for May reveals vehicle retail vulnerability in low economic growth

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General Comments on May 2014 NAAMSA sales:

• The month of May 2014 experienced a 7.41% increase in sales compared to April 2014.


• Month on Month all goods types experienced positive growth.


• Year on Year monthly comparison shows a decrease of -9.22% in May 2014 compared to May 2013. The average sales per day in May 2014 were less than May 2013 (1,979 vs 2,096 at 25 business days and 26 business days respectively).


• Year to date (January – May 2014) comparisons shows that vehicle sales are down by -5.89% in the first 5 months of year when compared to last year.


• Month on month Exports decreased significantly in May (-7.05%) with Passenger and Bus being the main contributors, although in comparison to May 2013, there was a decrease of 40.5% in exports experienced.


• AMH & AAD saw an increase in May 2014, although at a slightly low percentage of 1.95%.

General Macro and Industry Comments:

• The country’s Q1:14 Gross Domestic Product slowed to 1.6% y/y from 2.0% in Q4:13 and from 3.8% q/q in Q4:13 to 0.6% q/q in Q1:14. Standard Bank Research has revised its GDP forecast for 2014 to 2.0% down from 2.1%.


• The MPC left the repo rate unchanged in the third week of May from the 0.50 bps rate hike in the beginning of the year (end January).


• Headline annual inflation rate (CPI) increased from 6.0% y/y in March 2014 to 6.1% y/y in April 2014. On average, prices increased by 0.5% between March 2014 and April 2014. Transport index increased by 0.4% of a percent point between March 2014 and April 2014, this was mainly due to a 5c per litre increase in petrol price. The annual rate decreased to 6.8% in April 2014 from 6.9% in March 2014.


• Standard Bank research commented in addition, new vehicle price inflation accelerated to 7.0% y/y in April, from 6.7% y/y in March, which could be on the back of the weaker currency.


• Fuel prices have risen by 34.3% in petrol (inland) and risen by 26.5% in Diesel (inland) since Jan 2012 to May 2014. Fuel prices have risen by 82.7% in petrol (inland) and risen by 88.6% in diesel (inland) since Jan 2010 to April 2014. Further, the price of fuel in the country has gone up by 287% in petrol and up by 417.2% in diesel since Jan 2001.


• All of these factors are expected to hinder vehicle sales growth.

Factors that will inhibit growth include the following:

• Low level of economic growth is expected in 2014, 2.0% for 2014 (Standard Bank Research).


• Rising inflationary pressures will remain a challenge. Food, fuel, above inflation wage settlements, as well as exchange rate fluctuations will pose risks to the inflationary outlook.


• Exchange rate fluctuations will also have an impact on vehicle pricing. With 2 thirds of vehicles sold in RSA being imported (NAAMSA) pricing will be vulnerable to a depreciating Rand.


• The vehicle replacement cycle may have reached its peak, putting further dampening pressure on sales growth.

South African Vehicle Exports: (1st Quarter)

• From the first quarter of 2014 to the first quarter of 2013 export volumes decreased by 16.42%. This equates to 11,867 less vehicles exported in the first 3 months of 2014 compared to 2013.
• PAS vehicles (48.9%) and LCV’s (50.7%) together made up 99.6% of total vehicle exports in the first quarter 2014.
• These seem to suggest that PAS are in decline, with a decrease of 6.43% from 2012 to 2014 while LCV’s increased by 15.74% during the same period.
• As at the end of the 1st quarter of 2014 South Africa’s largest trading continent in terms of vehicle exports was Europe with 37%, followed by Africa with 32%, and North America with 17%. Asia and Australasia.
• Even though Exports decreased overall, Africa and Europe have both increased in their percentage contribution of vehicles being exported from South Africa, growing by 14.65% and 16.04% respectively. Asia and North America declined by -8.05% and -33.62%.
• In terms of volumes South Africa exported 20,495 vehicles into Africa in 2013 compared to 19,639 in 2014 showing a 4% decrease. Europe had 23,013 vehicles imported from South Africa in 2013 decreasing to 22,318 vehicles in 2014 showing a 3% decrease.
• The decrease in export volumes could be due to the Mercedes-Benz C-Class model not being exported in the first half of the year.
• The key driving factor in the decrease in the number of vehicles exported into Africa may be down to the decrease in the number of Light Commercial Vehicles (LCV) being exported. LCV’s grew by 18.35% from 2012 to 2013 (15,019 to 17,775), however, in 2014 LCV’s declined by 14.41% from 2013 (17,775 to 15,214). Of the total vehicles exported into Africa LCV’s made up 83% and 87% in 2012 and 2013 respectively, this has dropped to 78% in 2014.
• Although Europe’s total % contribution has increased over the years we can see that the percentage split of Passenger vehicles have decreased from 56% in 2012, to 48% in 2013 and 38% in 2014. The decrease in Europe’s Passenger vehicle imports is due to the increase in volume of LCV vehicle exported. In the first 3 months of 2012 South Africa exported 9,287 LCV vehicles to Europe; this has increased to 13,819.

NAAMSA Seasonality and Average Selling Days:

• On average May has ranked the 9th best performing month in the year since 2012. May 2014 had 25 selling days (Mon-Sat), with an average of 1,979 sales per day. May 2013 had 26 selling days, with an average of 2,096 sales per day.
• Between Jan and April 2014 the average selling per day has been 2,104.
• May 2014 has ranked the 44th best performing month out of the last 89 months since January 2007 and 4th best performing month this year.
• The average number of sales for May since 2012 has been 52,270 and the average number of sales for May since 2010 has been 45,677.

New vs Used Deals – SBSA vs Trans Union

• VAF saw a decline in application volumes from November 2013 to December 2013 for both new (18%) and used (19%), this then increased again from December 2013 to January 2014 (New – 11% & Used – 16%) and has subsequently remained flat during April 2014.
• Comparing TransUnion April 2014 to YTD April 2013, there is an increase of 21% in new vehicle sales and an increase of 20% in the used vehicle market.
• The new to used ratio in the market is showing an upwards trend, with currently 1.67 used cars being sold for every new.

[ Comments on NAAMSA New Vehicle Sales Report - May 2014 by Nicholas Nkosi – Head of Standard Bank Vehicle and Asset Finance - Personal Markets]

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NAAMSA vehicle sales report for May reveals vehicle retail vulnerability in low economic growth