Good news for South Africa’s motor industry

The National Association of Automobile Manufacturers of South Africa’s (Naamsa) New Vehicle Sales stats for September 2022 show a year-on-year increase of 10.8% amid the despondency about load shedding and other weakening economic indicators.

The automotive industry contributes 4.3% to South Africa’s GDP, with the export of vehicles and automotive components reaching a record amount of R207.5 billion – equating to 12.5% of South Africa’s total exports – in 2021.

According to Naamsa, Aggregate domestic new vehicle sales in September 2022 rose to 47,786 units,  reflecting an increase of 4,639 units from the 43,147 vehicles sold in September 2021.

Additionally, Export sales recorded a significant year-on-year increase of 104,6% from 21,199 units to 41,474 units in September 2022 compared to the 20,275 vehicles exported in September 2021.

The total reported industry sales of 47,786 vehicles comprise dealer sales, rental industry sales, and sales to government and industry corporate fleets.

The breakdown of these four segments is as follows:

• Dealers represented 81.9% of sales, with an estimated 39,152 units sold.
• The rental industry represented 14.2% of sales.
• Government sales represented 2.3% of sales.
• Industry corporate fleets represented 1.6% of sales.

Naamsa noted that the September 2022 new passenger car market had registered an increase of 9,7% compared to new cars sold in September 2021. The car rental industry supported the new passenger car market during the month and accounted for a solid 18,9% of sales in September 2022.

Domestic sales of new light commercial vehicles – bakkies and mini-buses – also saw an increase of 14.9% year-on-year, while medium and heavy truck segments of the industry reflected an increase of 15.3% and 1.8%, respectively.

Market forecast

Despite the positive numbers for September 2022, The new vehicle market’s resilient performance is decelerating due to the sixth consecutive increase in interest rates since November 2021, said Naamsa.

September 2022 was by far the worst month of the year in terms of the cumulative amount of load-shedding. The higher stages of load-shedding seem to have an amplified negative impact on production and the South African economy as a whole.

The South African Reserve Bank noted that economic and financial conditions were expected to remain more volatile for the foreseeable future and revised its economic growth outlook for 2022 lower due to load shedding and other weakening economic indicators.

The global economy has entered a period of persistently high inflation and weaker economic growth impacting demand, said Naamsa.

As a result, while the new vehicle market’s performance for the year-to-date is still 13.4% ahead compared to the corresponding period 2021, the pace of growth being experienced in the market is expected to slow down for the balance of the year, Naamsa added.

The association also noted that the noticeable strong performance in vehicle exports during the month could still be attributed to the knock-on effects of the cyberattack on Transnet operations during September 2021.

Nevertheless, growth prospects for domestic vehicle exports remain optimistic on the back of new locally manufactured model introductions during the last quarter of the year.

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