Y-o-y
growth in car sales 25.5% in January
Car sales in November and December were arguably considerably softer than one had hoped
for. One had argued that an increased tendency to delay purchases until the new year in
order to obtain a new year registration date contributed in part to the relatively weak
November and December sales. This argument appears to have been partially vindicated by
the enormous strength of car sales in January. Year-on-year growth was no less than 25.5%.
All the same, the strength of the recovery of sales in January provides confirmation that
the economy has opened the new year on a positive note and that the moderate growth in
consumption of 3%-plus seen in recent months, is firmly intact. This is encouraging in the
light of the severe deterioration of business confidence in recent months. It also serves
to highlight the discrepancy which currently exists between the depressed business mood on
the one hand and a reasonable pace of real economic activity on the other hand. However,
this should not be a cause for complacency. For one thing, the strength of car sales might
be explained in part by a strong burst of pre-emptive buying in the new year to beat off
price increases expected to result over the course of the next few months as a consequence
of the Rand’s steep decline between September and the present. In particular, the
newfound strength of the Euro against the Rand could remove a moderating influence on
passenger car prices that existed during most of 2000. |
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One’s concern about
the deterioration in business confidence relates more to the longer term implications for
the economy and fixed investment in particular rather than to the short-term outlook for
the coming year. The latter still seems on track for the economy to obtain a growth rate
of at least 3% this year.
LCV and MCV sales do well, but HCV sales slump in January
In the commercial vehicle category, LCV and MCV sales also did well. The year-on-year
growth in sales for these two categories in January was 11.3% and 29.9% respectively. In
contrast, however, year-on-year growth in HCV sales was negative, at –2.8%. Before
becoming unduly concerned about this outcome however, it should be noted that HCV sales
over the December/January holiday period are notoriously erratic. Accordingly, one would
not like to draw unduly negative inferences from the January HCV sales figures. In
conclusion, January vehicle sales figures provide confidence that forecasts for a 5 to 10%
growth rate in the motor industry in 2001 are still very much in the right ballpark.
Strong vehicle sales do not support the case for lower interest rates
The strength of January’s vehicle sales figures is hardly suggestive of an economy
that is down and out and desperately in need of interest rate relief. Whilst it is true
that the motor industry is performing better than most other industries in the economy,
its buoyant performance suggests that it would be far too premature for monetary policy to
be loosened soon in the wake of the inflationary implications of the Rand’s steep
decline. |
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