MOTOR vehicle export sales plunged by 29.9 percent to 25 786 units in May compared with the same month in 2021 due to the flooding in KwaZulu-Natal, damages to the Toyota plant and widespread global economic decline.
The Automotive Business Council said yesterday that various key export markets continue to face multiple headwinds, including rising interest rates, supply chain disruptions, resurging Covid-19 waves as well as producer and consumer inflation at the highest levels in decades.
Exports are key to maintaining the competitiveness of the local auto industry, one of the country’s biggest sectoral employers, because of the relatively small local market.
For the year-to-date, vehicle exports are now 6.2 percent below the level of the same period in 2021.
The council, however, said “prospects for 2022 remained optimistic on the back of further new locally manufactured model introductions during the year, and still good prospects for exports, despite moderating global economic growth”.
May new vehicle sales in the local market declined 2.1 percent to 39 177 units compared with the same month a year before.
This, said the Automotive Business Council, reflected the knock-on effects of disruptions caused by floods in KwaZulu-Natal and many factors reducing domestic economic growth and disposable incomes such as rising interest rates, fuel price increases and the impact of load shedding.
New passenger car sales in May increased by 13.8 percent to 27 437 units. The car rental industry supported the new passenger car market and accounted for 10 percent of sales in May 2022.
Sales of new light commercial vehicles, bakkies and mini-buses at 9 221 units fell by 22.6 percent, due to the impact of floods in KwaZulu-Natal on minibus and light commercial vehicle production.
Sales for medium and heavy truck segments increased 11.8 percent to 614 units, while heavy truck and bus sales increased 7.1 percent or 127 units.
Kelston Motor Group operations director Peter McNaughton said that, from a motor dealership perspective, their sustainability was already under “immense pressure” due to stock constraints that reduce income potential.
“With things like fuel costs climbing we are seeing a trend of increasing expenses being matched with a reduction in income – certainly from a dealership perspective.
“The effects of these increases and resulting inflationary pressures, compounded by other factors, will reduce consumers’ ability to replace their vehicles and therefore we will see a decrease in demand,” he said.
McNaughton said that although increased running expenses might stimulate sales of more economic models, history had shown that it was not enough to offset the reduction in demand.