South Africa’s economy may have shrugged off serious headwinds brought about by intensified load shedding and logistical challenges in 2023 after new vehicle sales showed some growth for the year overall, in spite of plunging for the five months in a row in December.
The Automotive Business Council (Naamsa) yesterday said the new vehicle market registered its fifth consecutive month of year-on-year decline in December 2023.
The aggregate industry new vehicle sales at 40 329 units recorded a decline of 1 392 vehicles, or a loss of 3.3% compared to the total new vehicle sales of 41 721 units during the corresponding month of December 2022.
Overall, out of the total reported industry sales of 40 329 vehicles, an estimated 35 483 units or 88.0% represented dealer sales, an estimated 8.7% represented sales to the vehicle rental industry, 2.2% to government, and 1.1% to industry corporate fleets.
Naamsa CEO Mikel Mabasa said the period under review had been challenging since it was their fifth consecutive month of year-on-year decline.
“We have not been able to outperform the 2019 pre-pandemic levels yet but we remain hopeful that 2024 will deliver a different outcome for new vehicle sales in South Africa,” Mabasa said.
“The pause in interest rate increases by the South African Reserve Bank during the second half of 2023 as well as the easing in inflation will continue to provide some support to counter the growing pressures on household incomes. Alongside faster economic growth and moderate inflation, lower interest rates would go a long way to support the new vehicle market in 2024.”
Naamsa said the December 2023 new passenger car market and light commercial vehicle market reflected a weak performance with a year-on-year volume decline of 3.9% in the case of new passenger cars and a loss of 2.9% in the case of light commercial vehicles.
Sales of medium commercial vehicles declined year-on-year by 24.2% while heavy commercial vehicles and buses increased by 13.9%.
Although increased load shedding and the logistical challenges at ports and the railway network left their mark on the industry’s performance in 2023, export sales in December ended the year on a positive note.
At 26 612 units, exports reflected a gain of 317 vehicles, or an increase of 1.2%, compared to the 26 295 vehicles exported during the same period December 2022.
As a result, exports ended the year at a record-high of 396 290 units, reflecting a sound increase of 44 505 vehicles or a gain of 12.7% compared to the 351 785 vehicles exported in 2022, exceeding the previous record of 387 092 units in 2019.
The National Automobile Dealers’ Association (NADA) said this was a heartening performance for the local manufacturers as vehicle exports were key to their sustainability.
NADA chairperson Brandon Cohen said the overall South African vehicle market managed to show some growth in 2023, which had seemed out of reach as the market declined in the second half of the year, and this was a good psychological boost for the industry as the industry entered 2024.
“Overall, last year, dealers had to cope with tough market conditions that were, arguably, the toughest since 2007 or even 1998 in terms of economic pressure on consumers. This led to some overstocking, placing importers, distributors, and manufacturers under significant pressure to facilitate stock movement. Consequently, efforts were made to enhance market activity through year-end incentives, ensuring sustained sales momentum,” Cohen said.
“The outlook for 2024 is cautiously optimistic, especially going into the second half of the year with expectations that interest rates should come down in the next few months on the back of lower fuel prices and hopefully a gradual decline in inflation.
“We will be closely monitoring currency exchange rates as these are very fluid due to the global factors affecting them, such as wars, natural disasters and the many general elections pending worldwide in 2024, including right here in South Africa. This year will certainly not be a leisurely ride and will again require resilience and commitment from the dealer network.”