New-car sales heading for recovery, say industry groups

The new-vehicle market is “poised for recovery” despite its continued inability to break free of a prolonged cycle of decline, say analysts.

Figures published on Monday show year-on-year sales of cars and commercial vehicles fell yet again in September, to 44,081. That was 4.1% fewer than the 45,979 of September 2023.

Car sales, however, improved for the second month in a row, prompting National Automobile Dealers’ Association chair Brandon Cohen to observe: “We are not out of the woods yet but the data is showing positive signs in the domestic market and sentiment continues to improve. This momentum will hopefully translate into stronger sales in the medium to long term.”

Car sales grew 2% year on year to 30,218. However, the total market was dragged down again by a 17.1% fall in sales of bakkies and minibuses. Toyota’s continuing challenge in meeting tough new European emissions standards for its Hilux bakkie has resulted in reduced production of the flagship product.

Medium, heavy and extra-heavy trucks experienced mixed fortunes in September.

The overall upshot was that, to the end of September, aggregate 2024 domestic new-vehicle sales numbered 377,835. That was 5.8% fewer than the 401,169 at the same stage last year.

The figures were published by industry association Naamsa, and CEO Mikel Mabasa said that despite the slower market, a slightly improved third-quarter performance provided hope that “the tide for higher new-vehicle sales will turn and show some signs of recovery as we move closer to year end”.

WesBank marketing head Lebo Gaoaketse was also determined to see a positive trend. He said September’s interest rate cut of 25 basis points, a stronger rand and other improved economic indicators were a step in the right direction. Of the rate cut, he said: “The immediate effects are small but, philosophically, provide a stimulus to the market in sentiment.”

Cohen said: “The industry remains cautiously optimistic about potential improvements in the fourth quarter, driven by the introduction of new models, additional brands in the lower price segments and aggressive dealer incentives.”

Vehicle exports experienced another torrid time in September, falling 38.1% from a year earlier to 21,964. For the year so far, the deficit is 19.7% — 232,299 against 289,198.

Mabasa, however, saw reason for hope.

“The US Federal Reserve’s reduction in interest rates and the European Central Bank’s second interest rate cut in 2024 could provide a boost to SA’s export performance,” he said.

“Though vehicle exports to Europe have slowed due to regional economic challenges, exports to the US have surged by 132% year to date, offering promising signs for the remainder of the year.”

furlongerd@businesslive.co.za