Good news for car sales in South Africa as buying patterns begin to shift

 ·2 Sep 2022

Year-on-year sales comparisons appear to be beginning to show a consistency of trend, indicating some form of stability returning to the new vehicle market, according to financial services firm Wesbank.

New vehicle sales in August were the second-best performing sales month to date in 2022, just as they were last year at this time. August recorded 47,420 new vehicle registrations according to Naamsa | the Automotive Business Council, 14.2% higher than the same month last year.

“It is interesting to note the correlation in market performance this year against 2021,” said Lebogang Gaoaketse, head of marketing and communications at WesBank. “Last year, August put in the second-best selling month at the time, March 2021 being the best sales month. Coincidentally, March 2022 sales have so far been this year’s best sales month.”

If it could be defined as a trend, the market prospects for the remainder of the year could hold further promise, said Wesbank. August 2021 sales were usurped by September and then November volumes last year.

“August sales are also reassuring in the sense that the volume increase comes off that relatively high base,” said Gaoaketse. “Doing so in the face of the hike in interest rates during July appears not to have dampened any market demand.”

While more interest rate increases are inevitable this year, demand in the new vehicle market continues to grow. “Applications for finance continue to show a growing demand for vehicle replacement, with WesBank’s book showing strong double-digit growth being driven by applications for new vehicles,” he said.

That demand was clearly evident in August sales with shared successes across the passenger cars and light commercial vehicle (LCV) sectors. The performance came from consumer demand as rental sales were down 23.7%, albeit still contributing 3,912 units to the overall market volume.

Passenger Cars grew 14.6% to 31,269 units compared to August last year, representing very similar volumes to July. It was LCVs that contributed 13,281 units, up 13.1% year-on-year, that assisted the market, a far better performance than the 9,552 sales last month.

Dealers will have been smiling with their performance up 23.4% and 10.5% respectively for passenger cars and LCVs, said the lender. The 40,889 sales done on the showroom floor during August represented 86.2% of the market.

The appeal of the pre-owned market appears to be waning, likely due to price inflation and the increasingly limited availability of good stock,” said Gaoaketse. “Where the pre-owned market has been offering affordability solutions for cost-conscious consumers, the average deal size on a used car has increased over 10% year-on-year, while the value of finance agreements on new vehicles over the same period is static.”

This will be fuelling the new vehicle market as the replacement cycle comes under pressure and motorists require a new mobility solution to combat the rising operating costs of older vehicles.

New cars financed amounted to 59,096, versus used vehicles, at 119,061.

Year-to-date, new vehicle sales are up 13.8% to 344,244 units, showing reassuring signs of the market’s continued recovery, noted Wesbank.

Read: A bunch of R1 million cars just launched in South Africa

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