However, Mikel Mabasa, CEO of automotive business council, naamsa, has painted a positive picture of the economic environment, which will support future new vehicle sales.
Total domestic new vehicle sales increased by 1.3% in last month to 43 389 units from the 42 822 vehicles sold in July 2022. Sales were depressed by a 9.7% decline in new passenger car sales to 27 839 units from the 30 824 new cars sold in July 2022.
Vehicle dealerships accounted for 78.3% of new passenger car sales during the month and 81.8% of total vehicle sales.
Sales of new light commercial vehicles, bakkies and mini-buses increased year-on-year in July 2023 by a substantial 32.6% to 12 666 units and heavy truck and buses by 31.6% to 2 201 units, but medium commercial vehicle sales declined by 11.6% to 683 units.
Total new vehicle sales for the first seven months of this year are now 4.4% higher at 309 359 units compared to the 296 362 units in the corresponding period last year.
Mabasa says the unchanged interest rates and improvements in the country’s inflation rate bode well for the car market after breathing a sigh of relief for new vehicle buyers following the decision by the South African Reserve Bank (SARB) to pause interest rates at 8.25% in July 2023.
The decision to leave interest rates unchanged follows 10 consecutive hikes in interest rates totalling 4.75 cumulative percentage point hikes since November 2021.
Mabasa says the SARB’s decision to leave interest rates unchanged is important considering the distressed borrowing patterns among households as debt service costs’ share of disposable income remain high at 8.4% on average.
He says naamsa is also encouraged by the collaboration between government and business, with 115 private company CEOs signing a pledge in July 2023 to help the government turn the tide on South Africa’s well-documented economic challenges.
“The pledge will assist in achieving sustainable development and inclusive economic growth.
“Through the stewardship of Andrew Kirby, naamsa’s immediate past president and Toyota’s President and CEO, the auto industry will remain invested in supporting our country’s recovery efforts and will strengthen our investment story into the future,” he says.
Read more here: NAAMSA Infographic July 2023