The ‘perfect storm’ gathering as the ANC government continues to fail in so many areas, not the least of which is supplying sufficient energy to keep business going, is reflected in the new vehicle sales for September where total numbers were down by 4,1% compared to the same month last year.
In its analysis of the sales numbers, naamsa confirmed the energy situation allied to higher fuel prices, ongoing challenges in transport logistics, the volatility in commodity prices and the intricate external environment, have exerted significant pressure on the automotive industry's key performance indicators in September 2023.
Aggregate domestic new vehicle sales in September 2023, at 46 021 units reflected a decline of 1 963 units, from the 47 984 vehicles sold in September 2022.
Export sales recorded a decline of 5 217 units, or 12,6%, in September 2023 compared to the 41 464 vehicles exported in September 2022.
The September 2023 new passenger car market was down by 2 723 cars, or a loss of 8,4%, with the 18,9% of that taken up by the rental industry buoying up the figures.
Domestic sales of new light commercial vehicles, bakkies and mini-buses recorded an increase of 581 units, or a gain of 4,6%, while sales for medium vehicle volumes decreased by 44 units or a loss of 5,1%. The heavy truck segments of the industry reflected a positive performance during the month at 2 356 units, which is an increase of 223 vehicles, or a gain of 10,5%, compared to the corresponding month last year.
“September sales show the biggest decline in market performance year-on-year since December 2021,” says Lebo Gaoaketse, Head of Marketing and Communication at WesBank. “However, comparisons remain theoretical given the market’s prolonged recovery from the pandemic and a broader context and assessment is necessary for a more realistic view of activity and sentiment.”
WesBank described August’s performance as showing the first potential signs of strain amidst numerous economic headwinds. That month’s sales had declined 3,1% year-on-year, one of the first significant signs of strain for the industry since before the pandemic.
“The fact that there are now two consecutive months of strain, September seemingly bigger than August, provides some measure of concern for new vehicle sales,” says Gaoaketse. “But it is the signs of the trend that are concerning, not the outright numbers.”
Naamsa concurs and says: “Additionally, the industry faces potential upward pressures stemming from an elevated inflation outlook, fluctuations in the exchange rate, rising fuel prices and increased energy costs.
“On the positive side, In September 2023, StatsSA reported the manufacturing and finance industries were the core drivers of GDP growth in the second quarter of 2023, recorded at 0,6%. Motor vehicles, parts and accessories and other transport equipment grew by 9,5%, contributing 1,0% to the GDP. This unequivocally demonstrates that, despite the less favourable economic prospects, the outlook for the South African vehicle market in 2023 remains distinctly optimistic.”
From the dealer perspective, there is a pent-up demand for new vehicles, but many consumers are adopting a ‘wait-and-see’ approach when making their purchasing decisions. This caution is driven by the rising cost of living, which is putting pressure on private buyers' finances, and the economic slowdown, which is dissuading businesses from replacing their vehicle fleets at this time.
Brandon Cohen, the Chairperson of the National Automobile Dealers' Association (NADA), says: "Sales remain under pressure, and September was generally a challenging trading month, although there were some sparks of positivity.
“Applications to financial institutions for financing were slightly up, as were approvals, as consumers test the waters regarding their creditworthiness for a loan."
"Chinese and Asian brands are gaining momentum in several market segments, as are 'buy-down' derivatives of popular models. The used vehicle market is gradually stabilising as inventory prices have adjusted appropriately."
Colin Windell - proudly CHANGECARS
