South Africa posted a marginal increase in new vehicle sales in July 2023, affected by the decline in demand for passenger cars.
But the National Association of Automobile Manufacturers of SA (Naamsa), which released the latest vehicle sales data on Tuesday, said the Reserve Bank’s decision to pause interest rate hikes at 8,25% and the improvement in economic conditions, such as lower food inflation, was good news for the local car market.
Naamsa CEO Mikel Mabaso said: “The unchanged rates and improvements in inflation rates bodes well for the car market as the second largest household investment cost for many South African consumers, considering the distressed borrowings patterns amongst households."
He added that the debt-service costs share of disposable income remain high at 8,4% on average.
“The Producer Price index also significantly eased in June 2023 to 4,8%, compared to the 7,3% rate recorded in May 2023," Mabasa said.
According to Naamsa, aggregate domestic new vehicle sales in July were 43 389 units, an increase of 567 units, or 1,3%, from the 42 822 vehicles sold in July 2022.
Contrary to this, export sales recorded a significant increase of 11 896 units, or 47,3%, to 37 064 units in July 2023 compared to the 25 168 vehicles exported in July 2022.
Naamsa said the export increases reflect the low base effect of the July riots in KwaZulu-Natala in 2021, namely shocks on production and exports.
“Overall, out of the total reported industry sales of 43 389 vehicles, an estimated 7 878 units, or 81,8% of represented dealer sales, an estimated 14,1% represented sales to the vehicle rental industry, 1,7% sales to government, and 2,3% to industry corporate fleets,” Naamsa said.
However, the new passenger car market declined to 27 839 units, a drop of 2 985 cars, or a loss of 9,7%, compared to the 30 824 new cars sold in July 2022.
The car dealer industry accounted for 78,3% of the new passenger car market for the period.
Domestic sales of new light commercial vehicles, bakkies and mini-buses at 12 666 recorded a substantial increase of 3 114 units, or a gain of 32,6%, from the 9 552 light commercial vehicles sold during July 2022.
Sales for medium commercial vehicles declined by 90 units or 11,6% to 683 units in July 2023, from 773 vehicle units recorded in July 2022.
"The heavy truck and buses segments of the industry reflected a positive performance during the month at 2 201 units, signalling an increase of 528 units, or 31,6% compared to the corresponding month last year,” Naamsa said.
The July 2023 year-to-date new vehicle sales figure was recorded at 309 359, an increase of 4,4%, or 12 997 units compared to the 296 362 recorded for the same period last year.
Naamsa said it is encouraged by the collaboration between government and business, after 115 private company CEOs signed a pledge in July to help government turn the tide on economic challenges.
“The pledge will assist in achieving sustainable development and inclusive economic growth. Through the stewardship of Andrew Kirby, Naamsa’s Immediate past president and Toyota’s President and CEO, the auto industry will remain invested in supporting our country’s recovery efforts, strengthening our investment story into the future."
