New-vehicle sales growth ‘encouraging’ in challenging economic climate

New-vehicle sales in June were “upbeat” despite SA’s overwhelmingly negative economic climate, analysts say.

Figures published by Naamsa (the National Association of Automobile Manufacturers of SA) showed that 46,810 cars and commercial vehicles were sold last month. That was 14% more than the 441,052 of June 2022. 

As an indicator of improved consumer sentiment, however, that gap is misleading. In June 2022, Toyota’s Durban assembly plant was still closed because of April’s floods. The impact is most noticeable in the market for light commercial vehicles, where the absence of Toyota’s Hilux bakkie and Hiace minibus taxi reduced June 2022 sales to 8,875. Last month the number was 57.1% higher at 13,995. 

Car sales are probably a more accurate confidence indicator. Compared to a year earlier, they improved by 0.8%, from 29,544 to 29,795. Medium sized-trucks were 8.2% better, and heavy trucks and buses 19.6%. 

Whatever the reason, Gary McCraw, director of the National Automobile Dealers’ Association, said any sales growth should be welcomed. “Continued growth in the current challenging economic environment is encouraging, given that vehicle buyers are facing affordability pressures, a depreciating rand that drives prices higher, low consumer confidence and political instability.” 

New-vehicle sales are traditionally considered an accurate indicator of consumer confidence but WesBank marketing head Lebo Gaoaketse said the market was now “almost countercyclical, displaying reassuring levels of growth that outperform most sectors of the economy”. 

Naamsa CEO Mikel Mabasa said positive economic indicators were still outnumbered by negative ones but the motor industry and consumers alike should be heartened by June’s lower inflation and fuel prices, plus reduced daytime load-shedding. 

Halfway through 2023, the aggregate new-vehicle market totalled 265,824 — 4.8% ahead of the 253,540 at the same stage in 2022. Car sales shrank 1.3% over the same period, from 176,309 to 173,943, but light commercials were 20.3% ahead. 

Gaoaketse said market conditions should improve in the second half of the year. “More stable fuel prices, hopefully fewer if any interest rate changes, first-half growth for the manufacturing sector (and) a strong recovery in exchange rates will all contribute to economic performance as a whole during the second half, as well as affordability for consumers in the market for a new vehicle.” 

Vehicle exports fell by 12.6% last month compared to a year earlier, from 31,216 to 27,296. But at the halfway point of 2023, they were 4.7% ahead of 2022 — 173,560 against 165,703.