04 Apr New vehicle sales feel the pinch of distressed consumers in South Africa
The National Association of Automobile Manufacturers of South Africa’s (naamsa) New Vehicle Sales stats for March 2023 show a year-on-year decline of 0.6% due to the shrinking disposable income of consumers and the national shutdown that took place in mid-March.
For the period under review, aggregate domestic new vehicle sales, recorded at 50,157 units, reflected a decline of 308 units from the 50,465 new vehicles sold in March 2022.
The main reason for this was the decline in new passenger vehicles, which decreased from 33,788 new passenger cars sold in March 2022 to 31,631 units in March 2023 – a year-on-year decrease of 6.4%.
Naama said that this resulted from severely financially constrained consumers’ affordability to purchase vehicles or to service their car loan repayments amid the cost of living crisis in 2023.
This was coupled with the effects of the Human Rights Day holiday and the National Shutdown on 20 March 2023, as many dealers opted to close shop, said naamsa.
However, the association added that domestic sales of new light commercial vehicles, bakkies and minibuses increased by 11.1% year-on-year, from 13,973 units in March 2022 to 15,529 units during March 2023.
Sales for the industry’s medium and heavy truck segments also reflected a positive performance during the month, at 870 units and 2,127 units, respectively.
Medium commercial vehicles showed an increase of 80 units sold, while heavy trucks and buses had an increase of 213 vehicles, representing a year-on-year increase of 10.1% and 11.1%, respectively.
The total reported industry sales of 50,157 vehicles comprise dealer sales, rental industry sales, and sales to government and industry corporate fleets.
The breakdown of these four segments is as follows:
- Dealers represented 87.3% of sales, with an estimated 43,801 units sold.
- The rental industry represented 6.1% of sales.
- Government sales represented 4.1% of sales.
- Industry corporate fleets represented 2.5% of sales.
Notably, export sales increased by 1,026 units or 3,1% to 34,134 units in March 2023 compared to the 33,108 vehicles exported in March last year.
This is a positive sign on the back of a decline experienced in February 2023. The month-on-month export sales reflected an increase of 3,922 units to 34,134 units, compared to the 30,212 export vehicle units recorded for February – representing an increase of 12,9%.
While vehicle production is ramping up and the overall performance of vehicle sales and export sales has been steadily increasing, the continued monetary policy tightening, domestic and global slowing growth, as well as energy shortages will have greater spillover to the overall performance of the industry moving forward, said naamsa.
“The South African Reserve Bank (SARB) ‘s interest rates increase by 50 basis points to a prime lending rate of 11,25% is already impacting a shrinking disposable income purse many consumers rely on when making new vehicle sales decisions,” it said.
The perceived continued increase in interest rates would likely have a negative impact on the already severely financially constrained consumers, who will find it hard to justify the purchase of a new vehicle – impacting domestic sales.
However, despite this – and the persistent risk of prolonged load shedding – naamsa remains upbeat that our forecast for domestic sales will grow by 6,3% (at 563,000 units) for 2023, and export sales will increase by 8,3% (380,900 units).