Why South Africans are holding off on buying a new car right now

April sales offered a glimmer of hope for the South African new car industry as sales rose 0.7% compared to April 2018 – but consumers still appear to be holding off on buying a new car until after the elections.

This is the first increase in sales this year and brings a slowly declining trend in sales to a halt, according to figures released by the National Automobile Association of South Africa (Naamsa).

However, lender Wesbank cautioned the industry not to get carried away. “While the market will no doubt be reassured by this good news, it should not grasp at any major turnarounds just yet,” said Ghana Msibi, WesBank executive head of Motor.

The April market total of 36,794 units was still way behind March sales of 47,687, he said.

While April sales are traditionally slower due to fewer selling days and the Easter holiday season, the marginal increase remains valid compared to similar trading conditions last year.

Passenger car sales rose 3.9% to 24,989 units while Light Commercial Vehicle (LCV) sales declined 8.1% to 9,810 sales during April compared to the same month in 2018.

“Household budgets are continuing to remain under pressure and consecutive months of petrol price increases will no doubt begin to take their toll,” said Msibi.

“Combined with the natural uncertainty ahead of May elections, the April sales performance becomes even more reassuring as these conditions could easily have resulted in the continuing decline trend.”

Sales expected to pick up after elections

WesBank had forecast first-half sales to be slow, improving in the second half.

Total market sales year-to-date are down 3.7% compared to 2018, passenger cars accounting for a 6.2% decline while LCVs are up 0.7%.

“This April stability could be a sign of an earlier onset of improved trading, but it is early days to label it as such – the market can remain hopeful,” said Msibi.

“The April sales performance remains good news for the industry. We expect May sales to remain under pressure due to the elections and given whatever certainty from their results, South Africans will begin making informed vehicle purchase decisions during the second half,” she Wesbank executive said.


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Why South Africans are holding off on buying a new car right now