New car sales go full throttle despite economic headwinds

New-vehicle sales in May overcame economic headwinds to record an encouraging 15.6% increase on the previous month’s and a 10.1% rise on those of May 2022, according to motor industry body Naamsa. 

This was in spite of interest rate hikes, the rand weakening, supply chain disruption and rising inflation, said Naamsa CEO Mikel Mabasa. 

At 43,060 units, total sales in May were 3,959 units higher than the corresponding month in 2022, driven mostly by light commercial vehicles which rose 38.5%. Passenger cars rose 0.1%, medium commercials 2.7% and heavy trucks 19.3%. 

Year-to-date, total new-vehicle sales of 218,869 units are 3.0% higher than in last year’s matching period.

Vehicle exports in May 2023 were 31,437 units for a record gain of 67.5% compared with May 2022, boosted by the new-generation Ford Ranger and VW Amarok bakkies coming on stream at Ford’s Silverton plant. It came off a low base in May 2022 when vehicle exports were affected by the severe floods in KwaZulu-Natal which caused the temporary closure of Toyota’s Prospecton factory and affected the automotive supply chain. 

Naamsa said another positive note was 14.5% growth of new energy vehicles (NEVs) for year-to-date April compared with 2022’s matching period. Sales of pure electric vehicles rose 105.8%, hybrids rose 7.9% while plug-in hybrids fell 21.8% 

Naamsa cautioned against too much optimism driven by the sales growth, however. 

“An unprecedented operational environment is now redefining the performance of the automotive industry, with record high externalities for decades. These ongoing negative domestic and global economic activities directly affect the production mechanisms of the industry and therefore, the cost of doing business in SA,” said Mabasa. 

He said the tenth successive interest rate hike announcement by the Reserve Bank, with the prime lending rate now at 11.75%, was cause for concern. 

“For the first time, inconsistent with emerging market currencies, the rand went into a free flow mode to record lows. To top it all, by May 9, SA had been in the dark for as long as the entirety of 2022. To date, South Africans have spent 27% of the year without power compared to 9.5% of 2022 and the situation is likely to get worse as the winter season intensifies,” said Mabasa. 

“A load-shedding bound economy will cause irreparable harm to the automotive industry which has become the successful cornerstone of industrialisation and development in SA. 

“For SA, the risks are heavily tilted downwards, especially as debt levels continue to grow to record high levels. The likelihood of further monetary tightening is very high as inflation remains stickier than expected. On geopolitical issues, the vehicle export performance continues to be affected by stagflation shocks, amplified by the protracted Russia/Ukraine geopolitical conflict.” 

Toyota maintained its position as SA’s favourite brand in May with 11,395 sales, ahead of Volkswagen (5,259), Suzuki Auto (3,709), Hyundai (2,745), Ford (2,491), Nissan (2,314), Haval (1,877), Isuzu (1,871), Renault (1,848), Kia (1,668), BMW (1,228), Chery (1,211), Mahindra (907), Mercedes-Benz (692) and Daimler Truck (455) rounding out the top 15.