There were mixed emotions around the new vehicle sales figures for January that, although better than the same month last year, fell well short of expectations.
Toyota stayed on top of the sales pile, with Suzuki continuing its run of form to finish with the third-highest passenger car sales behind Volkswagen and ahead of Nissan.
Naamsa – The Automotive Business Council is seriously concerned about the current load-shedding schedule.
“Undoubtedly, the destructive higher stages of load shedding have an amplified negative impact on vehicle production and component manufacturing in South Africa. Loadshedding is the biggest inhibitor to drive the industry’s localisation ambitions, create sustainable jobs within the auto sector and attract investment opportunities into the country to grow the South African economy”, says Mikel Mabasa, naamsa CEO.
To counter the negative economic impact caused by load shedding, the government declared load shedding a national disaster to unlock resources and solutions to assist the country with the current energy crisis.
Aggregate domestic new vehicle sales in January 2023, at 43 509 units, reflected an increase of 2 006 units, or 4,8%, compared to January 2022. Export sales declined by 367 units, or 1,8%, to 20 536 units.
Overall, out of the total reported industry sales, an estimated 36 353 units, or 83,6%, represented dealer sales, an estimated 12,1% reflected sales to the vehicle rental industry, 2,2% to the government, and 2,1% to industry-corporate fleets.
In the passenger sphere, the gain over the same period last year was a paltry 873 cars. And this segment was heavily supported by the rental companies, which accounted for 16,2% of January sales. Light commercials, however, showed a more positive gain of 10,4%.
Sales for medium and heavy truck segments reflected a positive performance during the month and, at 461 and 1,354 units, respectively, showed 13 units increase, or 2,9% in the case of medium commercial vehicles and an increase of 122 cars, or a gain of 9,9%, for the heavies.
“The current talk of another State of Disaster, relating to the electricity crisis, presents another imposition for South Africa and the automotive industry, as it pushes buyers into taking more conservative approaches in their respective buying cycles,” says Mark Dommisse, Chairperson of the National Automobile Dealers’ Association (NADA).
The weak performance of the new vehicle market during the first month of the year is in line with expectations of a depressed economy along with ongoing structural problems and cost of living increases.
“The same challenges that confronted the economy and the automotive industry in 2022, such as persistent load shedding, high inflation and interest rates, and currency depreciation carried over into 2023, and the South African Reserve Bank has raised interest rates for the eighth consecutive time since November 2021 while adjusting the country’s GDP growth rate for 2023 down to only 0,3% due to extensive load-shedding and other logistical constraints,” comments naamsa.
WesBank says the pent-up demand of the new vehicle market during the majority of last year will help sales grow in 2023.
“The market has been stifled by low supply due to various logistical and manufacturing constraints across the globe,” says Lebogang Gaoaketse, Head of Marketing and Communications at WesBank. “
Despite this, 2022 sales still grew 13,9% year-on-year to levels experienced before the pandemic, although already under economic pressure.
The demand levels, as measured by WesBank’s rate of applications, have continued to show high levels of growth. With supply to meet this demand, we can naturally expect sales to increase.
Another contributing factor to new vehicle sales growth will be the shift back to new vehicles from the used market that has experienced softening price inflation and a lack of good quality stock.
Exciting new vehicle line-ups and a closing gap in value proposition between new and used will assist the new vehicle market with warranties and service plans.
Sales of new vehicles in January likely fell short due to tight consumer spending and a thin used car inventory. These factors will likely continue to weigh on sales in the months ahead, and affordability will continue to be a driving factor in the South African new-vehicle landscape.
