South Africa’s automotive industry surprised on the upside in May as new vehicle sales dramatically increased by 10.1% from a year ago on low base effects, in spite of multiple interest rate hikes, geopolitical perceptions, and load shedding having deleterious effects on operations.
The Automotive Business Council (Naamsa) yesterday said that aggregate industry new vehicle sales for May recorded a significant increase of 3 959 vehicles to 43 060 units.
This was a gain of 10.1% compared to the aggregate new vehicle sales of 39 101 units recorded for the corresponding month of May 2022.
According to Naamsa, the May 2023 new passenger car market and light commercial vehicle market reflected year on year volume increase of 0.1% or 15 units.
New passenger cars sales rose to 27 401 units, from 27 386 units recorded for May 2022, and light commercial vehicles saw a substantial increase of 38 5%, or 3 564 units.
Sales of medium commercial vehicles recorded an increase of 2.7% or 15 units at 580 compared to the corresponding month of May 2022 at 565.
Heavy commercial segments, which include HCV, extra heavy duties, and bus sales improved by 365 units, or 19.3% at 2 254 units in May compared to the same period last year recorded at 1 889 units.
For the year-to-date vehicle statistics, the domestic vehicle sales for May at 218 869 units signified an increase of 6 381 units, or 3.0% compared to the same period last year recorded at 212 488 units.
May export sales recorded 31 437 also showed a record high improvement at 12 498 vehicles, or a remarkable gain of 67.5% compared to the modest vehicle exports during May 2022 at 19 007 units.
Naamsa said Ford and Amarok new bakkies manufacturing boosted the vehicle export numbers for May 2023.
However, the significant marginal difference in exports statistics between May 2023 and low-base May 2022 was as a result of last year’s vehicle export knock-on effects of the severe floods disruptions in KwaZulu-Natal on the automotive supply chain and damages to the Toyota facility, along with a widespread decline in economic momentum around the globe, weighed severely on vehicle exports.
However, Naamsa CEO Mikel Mabasa said their in-house leading business confidence indicator of current and future developments in the domestic automotive industry reflected a gloomy outlook for nearly all of the automotive industry’s key performance indicators over the next three months.
Mabasa said business sentiment was riding a pessimistic tide following the 10th consecutive interest rate hike, weakening rand, and intensified load shedding.
He said a load shedding-bound economy would cause irreparable harm to the automotive industry, which had become the successful cornerstone of industrialisation in South Africa.
Mabasa also said fears of a global recession and threats on the certainty of South Africa’s future participation in African Growth and Opportunity Act (AGOA) had also manifested.
“The automotive industry is facing multiple headwinds including: the recent escalation of interest rates hikes; the depreciation of the currency on the back of geo-political risk reputation around the Russia-Ukraine war; sectoral supply chain disruptions; as well as producer and consumer inflationary pressures,” Mabasa said.
“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 South Africa.”