South Africa’s vehicle sales ended the second quarter on a firm footing with double-digit increases in sales, albeit from a lower base, according to the latest Automotive Business Council data released last week.
But the outlook for inflation and economic growth remains dampened, according to economists at the Bureau for Economic Research.
“Despite economic hardships, domestic new vehicle sales showed continued resilience. According to Naamsa (now known as naamsa/The Automotive Business Council), sales were up 14% year-on-year (y-o-y) in June – versus a 10.5% y-o-y increase in May,” economists noted in the Bureau for Economic Research Weekly Review released on Monday.
“However, this growth comes from a lower base due to the impact of last year’s floods on the Toyota plant in Durban,” they said.
In terms of units, 46 810 new vehicles were sold, which was up from 41 052 in June 2022.
“On the other hand, export sales declined by 3 920 units (-12.6% y-o-y) to 27 296 units in June 2023.”
BER economists added that electricity production had continued to contract in May, although this marks the period before Eskom reduced its load-shedding schedule from higher Stages 3 to 6 down to Stages 1 to 3 in June.
“Data from Stats SA revealed a 9% y-o-y decline in May, extending a series of contractions since September 2021. On a monthly basis, seasonally adjusted electricity production fell by 0.9% in May, after tanking by 4.3% in April,” the economists said.
Inflation expectations remain on the rise according to the BER’s latest inflation expectations survey, which saw average expectations increase modestly in 2023Q2.
Analysts, business people, and trade unions lifted their outlook for headline inflation by 0.2% to 6.5% in 2023. Expectations for 2024 and 2025 both increased by 0.1% to 5.9% and 5.6%, respectively.
However, average five-year-ahead inflation expectations decreased to 5.2% from 5.5% in Q1. “In contrast, households’ one-year-ahead inflation expectations surged to 8.1% in Q2, the highest since 2010. Households also project higher medium-term inflation, with the five-year expectation increasing to 10.7% from 9.9%.”
