Mikel Mabasa, the CEO of automotive business council naamsa, attributed the year-on-year decline in new vehicle sales in January to the lingering effects of cost-of-living increases, dampened consumer and business confidence, combined with the country’s port challenges and persistent load-shedding.

Mabasa said these factors “continued to undermine the new vehicle market’s recovery path”.

Total new domestic new vehicle sales declined by 3.8% in January 2024 to 41 636 units from the 43 294 vehicles sold in the corresponding month in 2023.

An estimated 84.3% or 35 108 new vehicle sales of the total reported industry sales of 41 636 units represented dealer sales, with 11.5% representing sales to the vehicle rental industry, 2.2% to industry corporate fleets and 2.0% to government.

New passenger car sales in January 2024 declined by 6.7% to 28 790 units from 30 863 units in the same month in 2023 while sales of new light commercial vehicles, bakkies and minibuses increased by 2.3% to 10 871 units from 10 623 units in the corresponding period.

Sales of medium commercial vehicles increased year-on-year by 13.3% to 520 units in January 2024, while heavy truck and bus sales rose by 7.9% to 1 455 units.

Lebo Gaoaketse, Head of Marketing and Communication at WesBank, said the outlook for new vehicle sales volumes was poor and that the market would be lucky to show any growth in 2024 following the five months of consecutive slowdown in volumes towards the end of last year and a relatively softer January performance.

Gaoaketse said economic headwinds remained a very real concern for household income and the motor industry at large but that the Reserve Bank’s decision to hold interest rates in January would hopefully provide some stimulus to market activity.

“Indebted consumers will have been relieved by the fourth consecutive hold on interest rates during January, which will continue to help buying power in the market and hopefully increase levels of demand as buying confidence restores,” he said.

Mabasa said the weak performance of the new vehicle market in January 2024 remained intricately linked to the major economic headwinds that shaped the market’s performance in 2023, including highly indebted consumers, high interest rates, high food and fuel inflation, load-shedding, and port backlogs and delays.

He said although South Africa’s economic growth outlook for 2024, with anticipated GDP growth of 1.2%, was stronger than in 2023, the country’s economic growth rate remained a key challenge for the new vehicle market going forward in view of the close correlation between it and new vehicle sales.

“The year is also marked by elections, not just in South Africa but also in other major markets, introducing an element of economic uncertainty.

“A start of an interest rate cutting cycle, likely to commence during the second half of the year but preferably earlier, accompanied by easing core and food inflation and improvements in the country’s energy and logistics infrastructure could provide much-needed relief for consumers and subsequently stir up some momentum in the new vehicle market.

“Encouragingly, the Absa Purchasing Managers’ Index (PMI) relating to expected business conditions in six months’ time, despite the current economic woes, rose as respondents’ expectations turned more optimistic relative to current conditions,” he said.

View more here: 20240201 Flash Report Summary January 2024