The first bit of news about the SA economy in 2011 has been released by NAAMSA in the form of new vehicle sales in January. 45 135 new units were sold in January 2011, up from 39 504 in December 2010. But this does not tell the full story of very robust sales. January and December are usually well below par months for selling new vehicles. Holiday makers are more likely to buying Christmas presents for others than new toys for themselves.
On a seasonally adjusted basis new vehicle sales were up from 45 404 units in December to 45 758 units in January, an increase of 7.4%. This followed a very strong November. If these trends are sustained, sales in 2011 will approximate 585 000 units, up 18% from the 494 340 units sold in 2010.
No doubt the SA motor industry would be cheered if sales at this pace were to be realised in 2011. Strong domestic sales, coupled with strong growth in exports of vehicles and components is already making a helpful contribution to the manufacturers and their distributors as well as on investors in motor dealerships.
(A case in point is Imperial’s AMH (which distributes Hyundai, Kia, Daihatsu and Tata), which saw a 67% increase year on year, after a 17% year on year rise in December. It would appear that AMH’s apparently weak numbers for December related to vehicle registrations going through in January rather than December. Taken together with Imperial’s recent trading update, which guided for a 40% to 45% increase in HEPS at the half year to December, one can expect some possible earnings upgrades for the group.)
The combination of low inflation in vehicle prices (thanks to the strong rand) and low inflation (also thanks to the strong rand) has proved very helpful to the SA motor industry, its manufacturers and its distribution arm.
This refutes the notion that a strong rand is bad for the SA economy and especially its manufacturing arm. The opposite is surely true. The strong rand helps stimulate domestic spending and so manufacturing output. A strong rand also comes with decent global growth and the export opportunities this provides for domestic producers.
Continue reading the full Daily View for 3rd Feb, 2011, here: Bringing in the Year of the Rabbit