Total new vehicle sales at the end of November had already surpassed the total for the whole of last year and, at the same time, produced a milestone achievement for Toyota with a market share of 28,1%, the second highest since coming out of the Covid lockdown – and on course to give the company its 43rd year of market leadership.
The total market showed its eleventh consecutive growth month and aggregate domestic new vehicle sales in November, at 49,413 units, reflecting an increase of 7,618 units, or 18,2%, from the 41,795 vehicles sold in November 2021.
Export sales recorded an increase of 13,479 units, or 64,7%, to 34,310 units in November 2022 compared to the 20,831 vehicles exported in November 2021.
Overall, out of the total reported industry sales of 49,413 vehicles, 39,998 units, or 81,0%, represented dealer sales, an estimated 14,7% reflect sales to the vehicle rental industry, 2,3% to the government, and 2,0% to industry-corporate fleets.
The November 2022 new passenger car market at 32,859 units registered an increase of 4,759 cars, or a gain of 16,9%, compared to the 28,100 new vehicles sold in November 2021. The car rental industry supported the new passenger car market during the month and accounted for 20,0% of sales in November 2022.
Domestic sales of new light commercial vehicles, bakkies and minibuses at 13,477 units during November 2022 were up 2,323 units or a gain of 20,8%. Sales for medium and heavy truck segments of the industry reflected a positive performance during the month and at 900 and 2,177 units, respectively, showed an increase of 134 units, or 17,5% in the case of medium commercial vehicles and, in the case of heavy trucks and buses 402 vehicles increase, or a gain of 22,6%.
This time a year ago, South Africa faced its first interest rate hike in three years. A year later, the country faced its seventh consecutive increase during November, raising interest rates to a five-year high.
“The prime lending rate was only higher in 2009,” says Lebogang Gaoaketse, Head of Marketing and Communications at WesBank. “It will undoubtedly place the onus on consumers to seriously consider affordability when it comes to applying to finance, whilst those already in debt will face increasing instalments, thus pressurising household budgets.”
The latest increase in the prime lending rate to 10,5% means the monthly instalment on an R400 000 car finance agreement has increased by at least R695 in the past year. Over a 72-month agreement, consumers would have to pay R50 000 more for their car.
In the wake of the Phala Phala findings – which saw the rand plummet in value – cost pressures going into December are likely to increase even further.
Despite this gloomy reality, new vehicle sales during November were assuredly unaffected as the market recovered from logistics upsets from the previous month.
“November sales put in a fighting closing period for 2022, displaying the relatively constant recovery of the market throughout the year,” said Gaoaketse, assuming the traditional slow-down in sales during December.
The strong performance of November sales has pushed the year-to-date performance back up to 13,6%.
“As consumer confidence grows in the wake of slowly improving economic conditions, we expect the new vehicle market to continue its recovery,” concludes Gaoaketse. “However, the headwinds of load-shedding, the political outlook, and the sheer reality of the increased cost of indebtedness will continue to focus on the performance of new vehicle sales in 2023.”
Speaking for the auto dealers, Mark Dommisse, Chairperson of the National Automobile Dealers’ Association (NADA), says: “Relatively strong sales of new motor vehicles in South Africa in November has come as a pleasant surprise to the local motor industry and dealer networks.
“We were expecting a similar market to October, considering the negatives affecting the economy and growing political uncertainty in the country, but consumers have once again proved us wrong. November’s tally of 49 413 units showed an improvement of nearly 3 500 sales from just one month ago and represented a significant 18,2% increase on the number of units sold in the same month last year.”
The Automotive Business Council confirmed the release of the industry’s Thought Leadership Discussion Document on New Energy Vehicles [NEV] by the end of December 2022.
Naamsa CEO Mikel Mabasa said the automotive industry has been discussing and consulting extensively during the past 12 months around the country’s path to NEV.
“The South African automotive industry appreciates the importance of working diligently to contribute to the decarbonisation of road transport to support carbon neutrality by 2050. We also recognise no single government policy or industry commitment alone will achieve this ambitious goal.
We must work collaboratively - at all levels of government and across all economic sectors - to identify the range of approaches necessary to establish sustainable pathways to carbon neutrality across sectors and the unique circumstances of the South African economic landscape,”
Mabasa said South African-based OEMs compete within the global OEMs’ production network within their overseas sister plants. Plant decisions need to be taken three years before the start of production, which means NEV plant decisions for the next general NEVs are taken now. NEV plant decisions require - and are influenced by - the availability of:
• Low logistics CO² footprint.
• Green and low-cost energy.
• Investment and infrastructure support.
• Competitiveness versus other international plants; and
• A suite of Government support incentives to lower the cost of production and stimulate demand.
Logically, South African OEMs would require at least similar support as their overseas sister plants to compete equally for plant decisions. For this reason, the industry has proactively worked on its proposals, which it will share with other social and business partners to accelerate our NEV roadmap without further delay.
NEV transition support is urgently required for positive plant decisions because OEMs need a lead time of at least three to four years to motivate their parent companies before any potential production could start and to align with existing production cycles.
