At the end of the second quarter of this year, 53% of chief executives believed that domestic new vehicle sales would increase in the next six months, according to the latest CEO’s confidence index compiled by automotive business council, naamsa.

At the end of the first quarter this year, only 25% of automotive chief executives held this view.

In addition, only 27% of automotive company chief executives now believe that domestic new vehicle sales will decline in the next six months compared to 50% at the end of the first quarter of this year.

The chief executives are even more upbeat about general new-vehicle business conditions, with 53% anticipating it will improve in the next six months while 27% believe conditions will deteriorate.

At the end of the first quarter of this year, only 13% of automotive chief executives believed general new vehicle business conditions would improve in the next six months, with 87% anticipating a deterioration.

Mikel Mabasa, the CEO of naamsa, says the views of the naamsa CEOs generally reflect a cautiously optimistic sentiment “in anticipation of improved business conditions during the second half of the year on the back of potentially two interest rate cuts before year-end”.

However, Mabasa says there is recognition that this would “rather stabilise than materially improve the industry’s key performance indicators over the next six months.

“Since the 29 May elections with a new government of National Unity constituted in the interest of all South Africans, sentiment has turned positive.

“Increased seasonal sales to the rental industry along with an easing of monetary policy in the industry’s main export markets also bode well by contributing to an improved second half of the year performance.

“However, a concerted effort is required to overturn the downward slope in new-vehicle sales and vehicle exports experienced over an extended period,” he says.

Commenting on the business conditions and medium-term outlook for new-vehicle sales, Mabasa says the downward trend in new-vehicle sales that commenced in the third quarter 2023 continued into the first as well as the second quarter 2024.

Mabasa says business conditions remained trying despite a quarter of no load-shedding, which normally impacts on overall costs, productivity and economic growth in the country.

He says cumulative new vehicle sales for the first half of the year are now tracking 7.5% below the corresponding period in 2023.

“Restrictive monetary policy, stubbornly high inflation and increasing household debt continue to underline the reality that affordability is driving new-vehicle sales,” he says.

However, Mabasa says the re-election of President Cyril Ramaphosa has provided some confidence of policy continuity in the newly established 7th Administration, which now has a unique opportunity to accelerate implementing structural reforms and turning the economy around.

“There is now an opportunity to put the economy on an upward trajectory that fosters greater business and investor confidence.

“A keystone of this is Operation Vulindlela, which has already resulted in many gains for the country, including the opening up of the electricity market and building better relations between businesses and government, which will improve investor confidence and the cost and ease of doing business in the country,” he says.