New vehicle sales gain momentum

NEW vehicle sales continued to show recovery last month as the industry recovered from its worst declines.

The National Association of Automobile Manufacturers (Naamsa) said the year started on a positive footing.

"However, sales in the medium and heavy commercial vehicle segments registered substantial declines compared with the corresponding month last year, suggesting continued subdued levels of economic activity," the association said.

Total market sales for January increased 15,4percent on the already depressed January 2009 but showed a 25percent growth over December.

"Even taking into account that December sales were 7,2percent down on the previous year, with some of that slowdown no doubt accounting for January sales, the start to 2010 is reassuring," said Jacques Brent, vice president of marketing, sales and service at Ford Motor Company.

Passenger car sales shot up by 41percent over December sales and 20,1percent higher than January 2009.

"The market should be careful not to become over-zealous by the strong numbers," warned Brent.

"January figures remain skewed by delayed purchase decisions out of 2009. While there is clearly growth being experienced, and what many industry players are planning for in their forecasts, February will display a better indication of where the market may progress to."

Nedbank economist Nicky Weimar said: "Going forward, underlying demand will remain relatively weak, with households remaining reluctant to purchase big-ticket items as income remains under pressure, debt levels are still high and labour market conditions remain tight."

Marcel de Klerk, managing executive of Absa Vehicle and Asset Finance, said he expected vehicle sales to increase by 6 to 8percent this year, representing new passenger vehicle sales of around 240000.

"Despite interest rate cuts, we haven't seen any real improvement in debt to disposable income ratio levels yet," he said.