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Vehicle Sales & Transfer Duty

Written by  Dr Johan Snyman
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Vehicle Sales & Transfer Duty Vehicle Sales & Transfer Duty

Underneath is our interpretation of buoyant vehicle sales figures and poor transfer duty paid figures.

The latter reflects the poor state of the residential property industry. These divergent trends (i.e. positive in the case of vehicles sold, and negative in the case of the residential property market) suggest that consumers are buying vehicles, but not houses.  According to banking economists, the banks enjoy larger profit margins on vehicle finance and credit card debt than on mortgage advances, and the payback period is shorter.  Thus, banks have become more selective in their lending behaviour.


Total vehicle sales were 12% higher in Aug 2011, compared to July 2011.  Compared to Aug 2010, they were 11% higher.



The annual percentage change of vehicle sales is currently 12%, reflecting the typical cyclical pattern evident in 1973, 1979, 1995 and in 2000 (i.e.  a sharp rebound from a low level, then a moderation in the cyclical movement that is due to comparative base effects.  This means that current high levels are being compared to growing levels a year ago).



The poor state of the residential property market is reflected in poor levels of transfer duty gathered by the fiscus.



In real terms the lacklustre performance is just as evident.  The level in July 2011 is exactly equal to the low point recorded in April 2009 during the global financial crisis.



When analysing year-on-year changes, the cyclical pattern is evident, except that the percentage movement is currently negative, compared with smaller positive movements in 1993 and in 2000 (refer circles).  More evidence of extreme weakness in the residential property market.


Dr Johan Snyman

Dr Johan Snyman

Johan Snyman obtained his BComm and MComm in Economics at the University of Stellenbosch, and complete his doctorate at the University of Cape Town.  He spent 8 years working as an economist at the Bureau for Economic Research, University of Stellenbosch and then established a private consulting firm, becoming Director of Medium-Term Forecasting Associates, a company specializing in research into building cycles and building costs.

In 2007 he was appointed Adjunct Professor in the Department of Construction Economics and Management at the University of Cape Twon.