New vehicle sales fell 8.1% in the second quarter compared with the first quarter as consumer budgets took strain due to high interest rates and ongoing affordability factors, and CEOs in the sector are largely pessimistic about a second half improvement.
The second quarter sales were 8.1% higher than the same time in 2022, but this reflected the lower base effect due to the impact of flooding in KwaZulu-Natal on vehicle production and supply chain disruptions at the time in 2022, a quarterly review by Naamsa showed yesterday.
It was also for this reason that second quarter 2023 domestic vehicle production increased 23% over the corresponding quarter 2022. During the second quarter vehicle exports increased 13.8% to 88.025 units compared to the same quarter in 2022.
However, load shedding, unplanned power outages and inflationary pressures, along with the global semi-conductor shortage, continued to disrupt and increase costs in the domestic supply chain.
This was evident in the capacity utilisation of motor plants, with light commercial vehicle capacity utilisation ranging between 100% and 33%, medium commercial vehicle between 67% and 44%, while car assembly capacity utilisation ranged between 98.3% and 84.2%.
The Naamsa CEOs Confidence Index, an in-house business confidence indicator of developments in the local automotive industry, reflecting sentiment expressed by Naamsa CEOs for the second quarter, largely reflected a pessimistic outlook for all of the industry’s key performance indicators over the next six months.
This indicated that negative considerations would outweigh the positive ones.
“Energy and logistical constraints remain binding on the domestic economic growth outlook, limiting economic activity and increasing costs. In addition, the current absence of a new energy vehicle policy framework to support the inevitable transition to NEVs present major risks to business opportunities,” Naamsa said.
Although the SA Reserve Bank had slightly increased its forecast for gross domestic product growth from 0.3% to 0.4% for 2023, the gloomy medium-term outlook for business conditions in the new vehicle market correlates with a stagnating domestic economy, the association said.
New energy vehicle (NEV) sales by 18 industry brands increased by 100.7% to 1 481 units in the second quarter 2023.
Naamsa said a timely new energy vehicle policy framework to support investment decisions for NEV manufacturing, to safeguard export volumes into the European market, was imperative for the domestic automotive industry’s inevitable transition to eco-friendly vehicles.
The industry employed 33 497 people in the second quarter, an increase of 105 jobs compared to head count as at the end of March 2023. Employment at independent vehicle importers as at June 30 was a head count of 7 541, an increase of 139 jobs.
Aggregate capital expenditure by the major light vehicle manufacturers in 2022 amounted to R7.1 billion, linked to new generation model investments.
BUSINESS REPORT