The persisting economic strain on businesses and consumers continued to impact directly on new vehicle sales as aggregate domestic new vehicle sales continued to decline.
This is according to Naamsa’s latest New Vehicle Sales stats, which showed aggregate domestic new vehicle sales in October 2023 – at 45,445 units – reflected a decline of 905 units, or a fall of 2% from the 46,350 vehicles sold in October 2022.
This was the third consecutive month of decline in the new vehicle market.
The report further showed that the new passenger car market at 29,912 units had registered a decline of 1,068 cars, or a loss of 3.5%, compared to the 30,980 new cars sold in October 2022.
This is despite Car rental sales accounted for a sound 18.3% or 5,468 units of the new passenger vehicle sales.
Domestic sales of new light commercial vehicles, bakkies and mini-buses at 12,361 units during October 2023 also recorded a decline of 387 units, or a loss of 3%, from the 12,748 light commercial vehicles sold during October 2022.
The total reported industry sales of 45,445 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 80.2% of sales, with an estimated 36,468 units sold.
- The rental industry represented 12.9% of sales.
- Government sales represented 4.1% of sales.
- Industry corporate fleets represented 2.8% of sales.
Exports sales number at 40,302 units reflected a substantial increase of 11,411 vehicles, or 39,5%, compared to the 28,891 vehicles exported in October 2022. However, this is compared to the number of vehicles exported during the month of the mass Transnet strike.
Vehicle exports for the year to date were now 12,7% ahead of the same period last year.
Economic constraints continued to impact new vehicle sales during the month as the rising cost of living and restrictive borrowing costs were depressing demand for luxury goods, said Naamsa.
The new vehicle market’s prolonged recovery from the COVID-19 pandemic continued into 2023 with the expectation that the market would return to the 2019 level after three years. However, The market is still 1.3% below the pre-pandemic level seen in 2022, it added.
“The country’s weak economic growth rate, although still marginally positive, remains a key challenge for the new vehicle market going forward in view of the close correlation between new vehicle sales and the GDP growth rate,” said Naamsa.
It further noted that supporting the new vehicle market over the medium term would benefit from moderate inflation, lower interest rates, and faster economic growth.
On the positive side is the long-awaited formal policy pronouncements from the Minister of Finance in the Medium-Term Budget Policy Statement in Parliament today – which would be a critical step to secure the future of the automotive industry in South Africa.
Despite a longer-term global economic outlook which remains clouded by risks to the inflation trajectory, the recent outbreak of the war between Israel and Hamas and the effects of climate change, the vehicle export momentum remains upward for the balance of the year, Nammsa added.