South African vehicle sales are expected to rebound in
2017 after three years of contraction, BMI Research said in a note on
Thursday.
It forecasts 1% growth of both passenger and commercial vehicles in 2017 from 2016’s dive in sales, which it estimates to have been about 9.6%.
"This growth will be indicative of a slow recovery in vehicle sales driven by low-base effects as total vehicle sales will grow to around 589,800 units in 2020, well below the peak levels of 714,315 units in 2006," BMI said in its note.
South African vehicle sales will average about 1.4% annual growth until 2020, BMI forecast.
"One of the biggest factors impacting the new sales market is the weakness of the rand. This is because prices of vehicles have historically shown a negative relationship with the rand-dollar exchange rate, which increases the cost of vehicles, particularly imports. In 2014, the rand depreciated from R10.49/$ in 2013 to R11.57/$ followed by a further depreciation to R15.47/$ in 2015, while total vehicle sales fell 1% and 4.1% respectively.
"We believe that the rand- dollar exchange rate will remain at an average of around R15/$ over the 2017-2019 period before beginning to strengthen to an average of R14 .70/$ in 2020, keeping vehicle prices elevated and placing downward pressure on new vehicle sales to 2020," the note said.
A rebound in SA will help the sub-Saharan Africa region’s vehicle sales grow 3.1% in 2017, which is slightly ahead of its global forecast for growth of 2.9%.
"However, given how far the market has fallen over the past two years and previous expectations for the potential of the African consumer, we highlight that this growth is well below where the region should be," BMI said.
It forecasts 1% growth of both passenger and commercial vehicles in 2017 from 2016’s dive in sales, which it estimates to have been about 9.6%.
"This growth will be indicative of a slow recovery in vehicle sales driven by low-base effects as total vehicle sales will grow to around 589,800 units in 2020, well below the peak levels of 714,315 units in 2006," BMI said in its note.
South African vehicle sales will average about 1.4% annual growth until 2020, BMI forecast.
"One of the biggest factors impacting the new sales market is the weakness of the rand. This is because prices of vehicles have historically shown a negative relationship with the rand-dollar exchange rate, which increases the cost of vehicles, particularly imports. In 2014, the rand depreciated from R10.49/$ in 2013 to R11.57/$ followed by a further depreciation to R15.47/$ in 2015, while total vehicle sales fell 1% and 4.1% respectively.
"We believe that the rand- dollar exchange rate will remain at an average of around R15/$ over the 2017-2019 period before beginning to strengthen to an average of R14 .70/$ in 2020, keeping vehicle prices elevated and placing downward pressure on new vehicle sales to 2020," the note said.
A rebound in SA will help the sub-Saharan Africa region’s vehicle sales grow 3.1% in 2017, which is slightly ahead of its global forecast for growth of 2.9%.
"However, given how far the market has fallen over the past two years and previous expectations for the potential of the African consumer, we highlight that this growth is well below where the region should be," BMI said.
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