RMI Predicts Bullish Year For New Car Sales

Following the release of new car sales data from the National Association of Automobile Manufacturer’s of South Africa (NAAMSA) this week, in which the association announced an overall new car sales improvement of 15% for 2011 compared to 2010, the Retail Motor Industry Organisation (RMI) predicts a further improvement of 11% in 2012.
Largely correct in its prediction for 2011, the RMI is more upbeat about it’s 2012 forecasts than most industry observers – NAAMSA’s 2012 projections translate into a conservative expected improvement of about 7.0% in domestic sales volumes for the year.
RMI CEO, Jeff Osborne explains: “There are many positive factors influencing our bullish prediction this year. Firstly, interest rates are currently low, and the possibility of further rate decreases is good. In addition, the banks have shown a tendency in recent times to be more willing to provide lending credit and we see this continuing in 2012. Apart from this, new vehicle prices have been well-contained for a significant period of time now.”
Bolstering the RMI’s optimistic sentiment is that, due to the extended period of loan agreements, a heightened degree of replacement demand is prevalent. It is also the RMI’s view that, when combined with encouraging economic factors, first-time buyers are likely to contribute meaningfully to the growth in demand, especially with buying trends indicating a move to smaller, more fuel-efficient vehicles.
A subsequent rise in demand for A and B segment-type cars was noted in 2011 (locally and particularly in the US), as shoppers chose to buy down. “Competition in these burgeoning segments is therefore extremely fierce. Nowadays, entry-level vehicles are sold with numerous features and niceties that, in the past, were the preserve of larger, more expensive vehicles,” explained Osborne.
According to NAAMSA, 2011 turned out to be a year of relatively solid growth. Industry trading conditions remained intensely competitive with over 60 brands and close on 2 200-model derivatives available to buyers. The association said the used vehicle market was estimated to have reached about 650 000 units which in turn had provided support to the automotive retail and distributive trade.
From an aftermarket parts and servicing point of view, 2011 was defined by sustained healthy trading activity. This was due, in part, to extended vehicle ownership periods. “Longer ownership periods mean vehicles are serviced and repaired outside their manufacturer-backed warranty periods. This trend is likely to continue in 2012, with the majority of franchised aftermarket parts suppliers reporting positive trading conditions last year,” concluded Osborne.
However, despite its overall optimism, the RMI remains concerned with the continued tightening of operational margins in all sectors, and has urged its members to remain pragmatic in their business operations.
Issued by the Retail Motor Industry Organisation (RMI) on behalf of RMI CEO, Jeff Osborne. For more information, contact 082-560-6630