Weak consumer demand and Easter holiday prolong vehicle sales decline

The constrained business environment, amplified by weak consumer demand and the Easter holidays, has affected the performance of the new-vehicle market, Naamsa said on Tuesday. 

It reported new-vehicle sales of 44,237 units in March 2024, down 11.7% from the 50,114 vehicles sold in March 2023.

In total, the first-quarter 2024 aggregate of new-vehicle sales was 5.3% below the corresponding quarter in 2023 and year-to-date sales are 84,837 units, compared with 92,246 in March 2023.

The split of domestic sales saw new light commercial vehicles, bakkies and minibuses at 14,870 units during March 2024, a decline of 4.3% from a year ago. The medium truck segment recorded sales of 726 units, which was 136 short of the same period in 2023. The heavy truck segment reflected a decline of 45 vehicles, with 2,064 units sold. 

Year-on-year export sales dropped 27.1% to 24,161 units. First-quarter results show a 4.9% decrease versus the corresponding quarter in 2023.

The effect of the SA Reserve Bank’s aggressive monetary policy, as it hiked interest rates to contain inflation, took some time to filter through to new-vehicle sales.

Due to ongoing cost pressures, including the escalating fuel price and high interest rates, affordability remains a decisive factor in purchasing decisions as consumers increasingly turn to more budget-friendly vehicles.

SA’s economic growth outlook for 2024 remains muted, but at a projected 1.2% by the Bank it would still be stronger than 2023. Better economic prospects are expected for the new-vehicle market only once the interest rate cutting cycle commences, which is likely during the second half of the year.

This is underscored by the Absa purchasing managers’ index,  which reflected a further improvement in sentiment towards business in six months’ time. The index rose to its most upbeat level since the start of 2023.