New vehicle sales decline raises concern amid economic pressures
Amid interest rate hikes and rising fuel prices, new vehicle sales have seen a second consecutive month of year-on-year decline, causing uncertainty among consumers and businesses. However, a closer look at the data reveals a more nuanced picture, indicating resilience in the market.
Consumers and businesses are grappling with uncertainty as new vehicle sales in South Africa recorded a second consecutive month of year-on-year declines.
Figures released by the National Association of Automobile Manufacturers of South Africa show that new vehicle sales dropped by 4.1% in September, with a total of 46 021 units sold. This decline, while significant, should be considered within the broader context of economic challenges.
Lebo Gaoaketse, the head of marketing and communication at WesBank, comments, “September sales show the biggest decline in market performance year-on-year since December 2021. However, comparisons remain theoretical given the market’s prolonged recovery from the pandemic, and a broader context and assessment are necessary for a more realistic view of activity and sentiment.”
August had already shown signs of strain in the industry, with a 3.1% year-on-year sales decline – a notable shift from the industry’s recovery path before the pandemic. The consecutive months of decline in September, which appeared more pronounced than in August, have raised concerns in the industry.
A closer examination of the month’s sales data reveals a marginal increase in sales volume (294 units) compared to the previous month, despite the greater year-on-year decline. August, in contrast, witnessed a more significant month-on-month gain of over 2 000 units, even though year-on-year sales had decreased.
“While the data indicates two months of negative growth, a market of 46 000 units aligns with volumes seen in 2019. This suggests a continued resilience and a slow, sustained recovery following the pandemic,” says Gaoaketse. “Although the market faces significant challenges, new vehicle sales continue to demonstrate resilience against the odds.”
Notably, the passenger car segment continued to lose market share, with September sales down by 8.4% to 29 669 units. In contrast, light commercial vehicles maintained their appeal and suitability, experiencing a 4.6% increase in sales, totaling 13 169 units.
The consecutive months of decline have moderated year-to-date sales to 2.5% compared to the first nine months of the previous year, although the market reached the 400 000-unit volume milestone. By the end of September, 401 315 units had been sold, compared to 391 500 in the same period in 2022.
Gaoaketse concludes, “The temporary relief from further interest rate hikes in September will be welcomed by households with tight budgets. However, other economic pressures, including fuel prices, inflation, limited income growth and the energy crisis, will continue to weigh on consumer and business confidence when making new vehicle purchase decisions.”
Source: MotorPress
