New vehicle sales surprise more than expected in South Africa

 ·7 Jul 2023

The National Association of Automobile Manufacturers of South Africa’s (Naamsa) New Vehicle Sales stats for June 2023 show a year-on-year increase of 14% despite the shrinking disposable income of consumers and continued economic hardships.

For the period under review, aggregate domestic new vehicle sales, recorded at 46,810 units, reflected a significant increase of 5,758 vehicles from the 41,052 new cars sold in June 2022.

Another substantial increase was noted in light commercial vehicles, bakkies and minibuses – showing a year-on-year increase of 57.1% or 5,070 units.

The June 2023 new passenger car and light commercial vehicle market reflected a relatively stagnant but encouraging year-on-year volume increase of 0.8% or 251 units for new passenger cars, recorded at 29,795 from 29,544 recorded for June 2022.

This reflects local motorists’ financial constraints in South Africa, as interest rates, fuel, and food prices remain elevated.

Sales for the industry’s medium and heavy truck segments also reflected a positive performance during the month, at 743 units and 2,327 units, respectively.

Medium commercial vehicles showed an increase of 56 units sold, while heavy trucks and buses had an increase of 381 vehicles, representing a year-on-year increase of 8.2% and 19.6%, respectively.

The total reported industry sales of 46,810 vehicles comprising dealer sales, rental industry sales, and sales to government and industry corporate fleets.

The breakdown of these four segments is as follows:

  • Dealers represented 83.5% of sales, with an estimated 39,086 units sold.
  • The rental industry represented 10% of sales.
  • Government sales represented 3.5% of sales.
  • Industry corporate fleets represented 3% of sales.

However, the export sales number of 27,296 units reflected a decline of 3,920 vehicles, or 12,6%, compared to the 31,216 vehicles exported in June 2022.

“Vehicle exports performed weaker in June 2023 compared to the corresponding month 2022, but the export momentum remains upward on the back of further new model introductions by major exporters in the domestic market,” said Naamsa.

Market forecast 

The unexpected extent of the upswing in the new vehicle market during June 2023, for the second month in a row, exceeded expectations, despite ongoing increases in the total cost of ownership, said Naamsa.

While some segments show record year-on-year growth, the most popular segment for South Africans – new passenger vehicles – remained relatively stagnant.

Challenges confronting the economy and the automotive industry, such as high interest rates, high inflation, and currency depreciation, continue to strain consumers’ budgets, and affordability appears to be driving new vehicle sales, said Naamsa.

However, in addition to an easing in inflation by more than expected and an improvement in significantly less daytime load shedding during the month, another welcome development was the renewed collaboration between business and government to urgently tackle key current challenges relating to energy, infrastructure and transport logistics, as well as combating crime.

“If successful, the collaboration efforts could assist in reducing policy uncertainty and promote a more predictable economic environment which would enable much higher levels of investment, growth and job creation and break out of the current low economic growth trap,” said Naamsa.

Head of Marketing and Communications at WesBank, Lebo Gaoaketse, added that there is hope for better news for the economy and consumers during the second half of the year.

“More stable fuel prices, fewer, if any, interest rate changes, first-half growth for the manufacturing sector and a strong recovery in exchange rates will all contribute to economic performance as a whole during the second half, as well as affordability for consumers in the market for a new vehicle.,” he said.

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