New vehicle sales decelerate for eighth month in a row

Lights on at a Honda car dealership on Hendrik Potgieter Road, Weltevredenpark. Picture: Karen Sandison/Independent Newspapers

Lights on at a Honda car dealership on Hendrik Potgieter Road, Weltevredenpark. Picture: Karen Sandison/Independent Newspapers

Published Apr 3, 2024


Car manufacturers in South Africa are scrambling to avert a crash from the persistently stubborn downward spiral after new vehicle sales plunged for the eight consecutive month in March, which might see it miss the target for the year if the trend continues.

According to the Automotive Business Council (Naamsa), domestic new vehicle sales fell by 11.7% in March year-on-year, a decline of 5 877 units down to 44 237 units from the 50 114 vehicles sold in the same month last year.

Naamsa yesterday said the new vehicle market for March was dragged lower by a steep 27.1% decline in export sales as they plummeted by 8 975 units to 24 161 units, compared to the 33 136 vehicles exported a year ago.

Vehicle exports reflected a mixed performance during the first quarter of 2024 following the record annual performance in 2023.

Since March concluded data for the first quarter 2024, this subdued print for March means that the aggregate new vehicle sales were now 5.3% below the corresponding quarter in 2023.

The sector is targeting to sell between 540 000 and 565 000 new vehicles in 2024, a significant mountain to climb considering that only 532 098 units were sold in 2023 and 529 556 units sold in 2022.

Naamsa CEO Mikel Mabasa Mabasa, however, said prospects for the balance of the year remained upbeat on the back of new model introductions by major exporters while the global economic cycle is expected to bottom out in the first half of 2024.

Mabasa said lower inflation, central bank easing and modest global economic growth were therefore expected to support the automotive industry’s export performance.

“Due to ongoing cost pressures, including escalating fuel costs, along with interest rates, affordability remains a decisive factor in purchasing decisions as consumers increasingly turn to more budget-friendly vehicles,” he said.

“Only once the interest cutting cycle commences, likely during the second half of the year, along with the easing of inflation, better economic prospects are expected for the new vehicle market.”

Out of the total reported industry sales of 44 237 vehicles, an estimated 39 016 units or 88.2% represented dealer sales, an estimated 6.0% represented sales to the vehicle rental industry, 3.5% to government, and 2.3% to industry corporate fleets.

At 26 577 units, the new passenger car market registered a decline of 5 024 cars, or a loss of 15.9%, compared to the 31 601 new cars sold in March 2023.

Domestic sales of new light commercial vehicles, bakkies and mini-buses fell by 672 units, or 4.3%, to 14 870 units from the 15 542 light commercial vehicles sold during March 2023.

The particularly early calendar impact of the Easter public holidays meant March 2024 was a much shorter selling month than March last year with 20 selling days versus 22 last year.

The National Automobile Dealers' Association (Nada) chairperson Brandon Cohen said March presented additional challenges with three public holidays, disrupting operations for both dealers and manufacturers, and further impacting consumer behaviour.

“Despite the challenges faced in March, the consistent resilience and adaptability demonstrated by South Africa's franchised motor dealers are indicative of their enduring strength in navigating dynamic market conditions,” Cohen said.

“While the month marked a continuation of declining retail vehicle sales, insights suggest promising fiscal performances for several industry stakeholders. As we move forward, our focus remains on building momentum and driving growth within the retail automotive sector.”

Sales for medium and heavy truck segments of the industry reflected a weak performance for March 2024 at 726 units and 2,064 units, respectively, which is a decline of 136 units, or 15.8% from the 862 units sold in March 2023 in the case of medium commercial vehicles, and, in the case of heavy trucks and buses a decline of 45 vehicles, or 2,1%, compared to the 2,109 units sold in the corresponding month last year.

Wesbank head of marketing Lebo Gaoaketse that all was not lost as March sales were only 1.1% down on February’s performance and the fact that March 2023 was last year’s best-selling month.

Gaoaketse said one can hope that April will bounce back and provide some level of correction against last year’s sales.

“The broader economy remains a challenge for South African motorists. With interest rates unchanged once again, they remain high amidst generally high inflation. Fuel prices will increase again this week, continuing to place pressure on household budgets and their ability to service debt,” Gaoaketse said.

“But considering the rate of applications per day was up against March last year, the levels of demand remain high.”