Another sign of consumer pain in South Africa

The constrained business environment, amplified by weak consumer demand, has resulted in a new vehicle sales shock in South Africa.

According to Naamsa’s latest stats, new vehicle sales experienced double-digit declines across the board in South Africa.

In March 2024, the new vehicle market continued to decline, a trend which started eight months ago but is only getting worse.

The total number of new vehicles sold in the domestic market was 44,237 units, which reflects a decrease of 11.7% (5,877 units) compared to the 50,114 cars sold in March 2023.

The new passenger car market was hit harder, with only 26,577 units sold, representing a decline of 15.9% (5,024 cars) compared to the 31,601 new cars sold in March 2023.

Export sales were even worse, with only 24,161 units sold in March 2024, a decrease of 27.1% (8,975 units) compared to the 33,136 vehicles exported in March 2023.

Overall, for the first quarter of 2024, aggregate new vehicle sales were now 5.3% below the corresponding quarter in 2023.

“The effect of the South African Reserve Bank’s aggressive monetary policy stance by hiking interest rates to contain inflation took some time to filter through to new vehicle sales, which continue to add to the prevailing negative sentiment,” said Naamsa.

“Due to ongoing cost pressures, including escalating fuel costs, along with interest rates, affordability remains a decisive factor in purchasing decisions as consumers increasingly turn to more budget-friendly vehicles,” it added.

WesBank agreed with this sentiment, adding that the broader economy remains challenging for South African motorists.

“With interest rates unchanged once again, they remain high amidst generally high inflation. Fuel prices will increase again this week, continuing to place pressure on household budgets and their ability to service debt,” said Head of Marketing and Communication at WesBank, Lebo Gaoaketse.

Nammsa noted that better economic prospects are expected for the new vehicle market only once the interest-cutting cycle commences, likely during the second half of the year, along with the easing of inflation.

Naamsa added, however, that prospects for the balance of the year remain upbeat on the back of new model introductions by major exporters, while the global economic cycle is expected to bottom out in the first half of 2024. 

This is underscored by the Absa Purchasing Managers’ Index (PMI), which reflected a further improvement in sentiment towards business in six months’ time, which rose to its highest upbeat level since the start of 2023.

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