Industry Trend Analysis - Car Sales To Recover In 2017 But Headwinds Remain - MAR 2017
BMI View : South Africa's new car market will experience a mild recovery in 2017 supported by a gradually improving economic picture and an easing of inflationary pressures. H owever, we expect high borrowing costs and low consumer confidence levels to continue to provide headwinds to growth in the passenger car segment in the year ahead.
In 2017, we expect the South African passenger car market to experience a mild recovery, expanding just 1.0% in 2017, following an estimated contraction of 11.0% in 2016. We believe that an improvement in South Africa's economic fortunes in 2017, represented by an expansion of 1.1% in real GDP growth in 2017, edging up from estimated growth of 0.5% in 2016, will be one of the main drivers of the return to growth in the country's autos industry. This will be further supported by a cooling of inflationary pressures, which will help bolster consumer spending power.
That said, we expect elevated borrowing costs and low consumer confidence to continue creating headwinds to growth in new car purchases in 2017. We therefore forecast passenger car sales to total 371,089 units by the end of 2017, which is well below the 2013 high of 450,296 units sold.
|Subdued Recovery In 2017|
|South Africa - Passenger Car Sales, Units|
|e/f = BMI estimate/forecast. Source: NAAMSA, BMI|