Good news for new vehicle sales in South Africa

The National Association of Automobile Manufacturers of South Africa’s (Naamsa) New Vehicle Sales stats for November 2022 show a year-on-year increase of 18.2% – despite a myriad of negative economic pressures, including a drastic increase in load shedding and prolonged Covid lockdowns in China.

The automotive industry contributes 4.3% to South Africa’s GDP, with the export of vehicles and automotive components recording a significant year-on-year increase of 64.6% to 34,310 units in November 2022 compared to the 20,831 cars exported in November 2021.

For the year-to-date, vehicle exports were now 17.9% ahead of the corresponding period in 2021, reaching 326,516 units sold, which has already surpassed the 300,000 target level for 2022, said Naamsa.

According to the association, domestic sales of new light commercial vehicles, bakkies and mini-buses recorded an increase of 2,323 units from the 11,154 vehicles sold in November 2021 to 13,477 units during November 2022 – representing a year-on-year increase of 20.8%.

Sales for the industry’s medium and heavy truck segments also reflected a positive performance during the month, at 900 units and 2,177 units, respectively.

Medium commercial vehicles showed an increase of 134 units sold, while heavy trucks and buses had an increase of 402 vehicles, representing a year-on-year increase of 17.5% and 22.6%, respectively.

The total reported industry sales of 49,413 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 81% of sales, with an estimated 39,998 units sold.
• The rental industry represented 7% of sales.
• Government sales represented 3% of sales.
• Industry corporate fleets represented 0% of sales.

Market forecast

Despite the positive numbers for November 2022, the new vehicle market’s resilient performance is decelerating due to the seventh consecutive increase in interest rates since November 2021, said Naamsa – adding that single-digit growth in new vehicle sales could be expected for 2023.

Vehicle exports performed strongly compared to the corresponding month in 2021, which was affected by the impact of a severe Covid-19 fourth wave in parts of Europe, the industry’s top export region. Given persistently high inflation and aggressive interest rate hikes in many advanced and developing countries at present, the risks to export sales reside on the downside, said Naamsa.

Additionally, growth prospects for the year’s balance remain constrained as higher interest rates and consequent higher debt servicing costs weigh on disposable income, it said. However, business and leisure travel recovery supported the new vehicle market to counter the growing pressures on household incomes.

Another concern is the instability of organised business in South Africa. The South African rand weakened after market analysts digested the news that President Cyril Ramaphosa may be impeached following a panel of experts’ findings against him.

Business Unity South Africa (BUSA) is concerned that the crisis may lead to instability in the governing party and the broader implications for confidence in the economy and country.

Nevertheless, the new vehicle market continued to outperform expectations, and with only one month to the end of the year, it was running 13.6% ahead of the corresponding period in 2021.

As a result of this, and the addition of several new model introductions over the past month and before the end of the year, growth prospects for domestic vehicle exports remain optimistic over the medium term, Naamsa said.

Read: The cheapest new cars you can buy from every brand in South Africa – starting at R157,000

Good news for new vehicle sales in South Africa