Santa brought a bag of goodies to the auto retail industry in December, with bumper sales climbing 16,2% above the figures for last December – simultaneously recording the 12th straight month of growth.
However, in releasing the sales figures naamsa - The Automotive Business Council did caution the industry’s recovery pace to pre-pandemic levels was slower than in 2021.
Aggregate industry new vehicle sales at 41 783 units showed an increase of 5 839 or a gain of 16,2%. The new passenger car market and light commercial vehicle market reflected a sound performance with a year-on-year volume increase of 15,4% in the case of new passenger cars and a gain of 16,1% in the case of light commercial vehicles.
Sales of medium commercial vehicles increased year-on-year by 36,9%, whereas heavy commercial automobiles and buses increased by 23,1%.
Export sales in December 2022 ended the year on a positive note and at 26 302 units reflecting a gain of 5 130 vehicles or an increase of 24,2%.
Overall, out of the total reported industry sales of 41 783 vehicles, an estimated 37 479 units or 89,7% represented dealer sales, an estimated 7,3% represented sales to the vehicle rental industry, 1,5% to the government, and 1,5% to industry-corporate fleets.
“Following a robust recovery in the 2021 domestic new vehicle market, increasing year-on-year by 22,2% to 464 493 units compared to the severely COVID-19 affected 380 206 units in 2020, aggregate new vehicle sales recovered further by 13,9% to 528 963 units in 2022, but still 1,4% below the pre-pandemic 536,612 units sold in 2019,” says naamsa.
New vehicle sales are regarded as a good barometer of the domestic economy's health. Following a passably upbeat first quarter 2022 industry performance, global supply chain disruptions along with the impact of the devastating floods in KwaZulu-Natal, elevated inflation, an upward trend in interest rates, record fuel prices, as well as record highs in the frequency and intensity of load shedding weighed heavily on both business and consumer confidence.
However, the new vehicle market’s performance in 2022 remained resilient despite the multiple national and international headwinds.
On a positive note, the lifting of COVID-19 lockdown restrictions in the country in 2022, with the recovery in business and leisure travel provided some support to the new vehicle market to counter the growing pressures on household incomes.
However, buying less expensive and smaller cars continued as a trend in 2022. Convincing sales in the various commercial vehicle segments indicated improved business confidence, even during tough economic times.
The following table summarises annual aggregate industry sales by sector from 2018 -
| Sector | 2018 | 2019 | 2020 | 2021 | 2022 | 2022/2021 % Change |
| Cars | 365 247 | 355 379 | 246541 | 304 341 | 363 092 | +19.3% |
| Light Commercials | 159 525 | 153 221 | 110 912 | 133 077 | 135 666 | +2.0% |
| Medium Commercials | 7 913 | 8 690 | 6 735 | 7 520 | 8 370 | +11.3% |
| Heavy Trucks, Buses | 19 579 | 19 322 | 16 018 | 19 555 | 21 835 | +11.7% |
| Total Vehicles | 552 227 | 536 612 | 380 206 | 464 493 | 528 963 | 13.9% |
Although the KwaZulu-Natal flooding disaster left its mark on the industry’s performance and the country’s primary logistics network during the year, vehicle exports at 351 450 units in 2022 reflected an increase of 53 430 vehicles or a gain of 17,9% compared to the 298,020 vehicles exported in 2021.
The following table reflects the industry’s export sales performance since 2018 –
| 2018 | 2019 | 2020 | 2021 | 2022 | 2022/2021 % Change |
| Cars | 221 681 | 260 843 | 178 788 | 173 774 | 238 288 | +37.1% |
| Light Commercials | 128 322 | 125 442 | 91 942 | 123 667 | 112 321 | -9.2% |
| Trucks & Buses | 1 136 | 827 | 558 | 579 | 841 | +45.3% |
| Total Exports | 351 139 | 387 092 | 271 288 | 288 020 | 351 450 | +17.9% |
“Global economic conditions have deteriorated significantly given persistently high inflation and aggressive interest rate hikes in many advanced and developing countries. The risks to export sales, therefore, reside on the downside for 2023, but growth prospects for domestic vehicle exports remain optimistic on the back of several new model introductions by major vehicle exporters” adds naamsa.
Gary McCraw, Director of the National Automobile Dealers’ Association (NADA) says: “We are particularly pleased the retail sales channel was responsible for delivering 37 479 units or 89,7% of the total vehicles sold in December, which is excellent for the health of these dealers who are still recovering from the lengthy Covid-19 lockdowns.
The growth was achieved in a year Toyota lost approximately 70 000 units from its local production when disastrous floods in KwaZulu-Natal put its plant out of action for four months.
“Not only did all the dealers survive but they showed agility as they switched to selling far more imported cars than usual, benefitting from ongoing, practical support from the Toyota head office and field staff which undoubtedly made these challenging times more manageable.”
“Just as COVID-19 pandemic-induced disruptions seemed to subside in 2022, Russia’s invasion of Ukraine dealt a further blow to business and consumer confidence globally and in South Africa. The geopolitical conflict in Ukraine resulted in further supply chain disruptions and inflated prices and the availability of strategic products and inputs,” continued naamsa.
“Energy prices have been at the centre of the inflationary surge and inflationary pressure, which caused an accelerated increase in interest rates in major world markets.
“In South Africa, consumer price inflation reached a 13-year high, increasing to 7,8% in July 2022. As expected, the South African Reserve Bank 2022 raised the interest rate seven times since November 2021 and to its highest level since 2016. The higher stages of load-shedding also seemed to have an amplified negative impact on production and the South African economy as a whole.
“However, despite the myriad of negative economic pressures and ongoing stock supply shortages, the new vehicle market continued to outperform expectations in 2022.
‘As far as 2023 is concerned, the domestic new vehicle market’s performance is expected to remain resilient despite weakening domestic economic indicators and a deteriorating global growth outlook. Growing concerns about global “stagflation”, which is high-interest rates combined with slow growth and high inflation, the continued economic impact and disruption of supply chains resulting from the Russia-Ukraine war, and the current pace of tighter monetary policy in major markets have increased the possibility of a global recession.
“There is also a likelihood of further near-term global supply chain disruptions stemming from the rapid re-opening of the Chinese economy that has resulted in surging COVID-19 infections.
GDP growth in South Africa continues to be adjusted downwards, and a 1,1% projection is on the cards for 2023. Given the close correlation between new vehicle sales and the GDP growth rate, single-digit growth could be expected for 2023 as the market returns to pre-pandemic levels in sales and exports.
