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PRETORIA: Reflecting on the new vehicle sales statistics for the month of August 2023, naamsa | The Automotive Business Council said that the weak new vehicle sales performance underlines the ongoing stressed business and consumer environment in the country given that negative economic considerations still greatly outweigh positive ones.
Aggregate domestic new vehicle sales in August 2023, at 45,679 units, reflected a decline of 1,476 units, or a fall of 3,1%, from the 47,155 vehicles sold in August 2022. Export sales recorded an increase of 10,405 units, or 33,5%, to 41,462 units in August 2023 compared to the 31,057 vehicles exported in August 2022.
Overall, out of the total reported industry sales of 45,679 vehicles, an estimated 38,292 units, or 83,8%, represented dealer sales, an estimated 12,2% represented sales to the vehicle rental industry, 2,8% to industry corporate fleets, and 1,2% sales to government.
The August 2023 new passenger car market at 28,951 units had registered a decline of 2,064 cars, or a loss of 6,7%, compared to the 31,015 new cars sold in August 2022. The car rental industry supported the new passenger car market during the month and accounted for a sound 16,2% of sales in August 2023.
Domestic sales of new light commercial vehicles, bakkies and mini buses at 13,652 units during August 2023 had recorded an increase of 363 units, or a gain of 2,7%, from the 13,289 light commercial vehicles sold during August 2022.
Sales for medium and heavy truck segments of the industry reflected a positive performance during the month and at 702 units and 2,374 units, respectively, showed an increase of 2 units, or 0,3% in the case of medium commercial vehicles, and, in the case of heavy trucks and buses an increase of 223 vehicles, or a gain of 10,4%, compared to the corresponding month last year.
The August 2023 exports sales number at 41,462 units reflected a substantial increase of 10,405 vehicles, or 33,5%, compared to the 31,057 vehicles exported in August 2022. Vehicle exports for the year to date were now 12,4% ahead of the same period last year.
The weak performance of the passenger car market reflected the impact of rising costs of living and lower disposable income on consumer sentiment and the ability to be active in the new vehicle market.
Affordability along with delayed replacement cycles appear to be driving new vehicle sales. On the positive side, the significantly less daytime loadshedding since June 2023, interest rates that were put on hold in July 2023 for the first time since November 2021 and inflation now firmly falling within the 3%- 6% target band, have been providing some relief for consumers. However, energy and logistical constraints remain binding on the domestic economic growth outlook, limiting economic activity and increasing costs.
Although the SA Reserve Bank has slightly increased its forecast for South Africa’s GDP growth from 0,3% to 0,4% for 2023, the medium-term outlook for business conditions in the new vehicle market continues to reflect subdued demand for high-priced items such as vehicles, which correlates with a stagnating domestic economy.
Vehicle exports reflected a substantial increase during the month compared to the corresponding month 2022 due to the ongoing knock-on effects of the devastating Kwazulu-Natal flooding and supply chain disruptions at the time. The longer-term global economic outlook remains clouded by risks to the inflation trajectory, ongoing geopolitical tensions and the effects of climate change. However, prospects for vehicle export growth for the balance of the year remain optimistic on the back of new model introductions by major exporters in the domestic market.
South Africa has advantageous access to world markets through free trade agreements with major markets such as Europe and the UK, and a preferential trade arrangement with the US. The African Growth and Opportunity Act [AGOA] Research Report, conducted by the Automotive Industry Export Council [AEIC], as released by naamsa on 31 August 2023, reflects the overwhelming evidence of how the various trade arrangements enjoyed by South Africa, such as AGOA, substantively secured, strengthened, and enhanced the domestic automotive industry’s exports and trade flows.
Finally, naamsa congratulates President Cyril RAMAPHOSA, on hosting a momentous and successful BRICS summit, which culminated in the addition of six new countries from January 2024. We are encouraged that the expanded BRICS collective will create mutual trade and investment opportunities, skills and technological transfers, and openness to new markets.
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