"Passenger car sales are a key indicator of consumer sentiment, and the positive growth in this segment for the second consecutive month is encouraging,” he said.

“While the Reserve Bank’s first interest rate cut in four years will take time to fully impact the market, we are already seeing other positive factors, including a stronger exchange rate, lower inflation, a positive 100-day performance by the Government of National Unity, increased foreign investment, 190 days without load shedding, and lower fuel prices.

“These are all promising signs,” he said.

However, Cohen said despite these green shoots, the economic environment remains challenging, with rising electricity prices expected to put further pressure on disposable income.

But Cohen said the industry remains cautiously optimistic about potential improvements in the fourth quarter, driven by the introduction of new models, additional brands in the lower price segments and aggressive dealer incentives.

Aggregate domestic new vehicle sales declined by 4.1% in September 2024 to 44 081 units from the 45 970 vehicles sold in the corresponding month in 2023.

Of the total industry sales, an estimated 79% or 34 830 units represented dealer sales, 15% sales in the vehicle rental industry, 3% sales to government and 2% to corporate fleet sales.

Sales of new passenger cars increased by 2% to 30 218 units last month from the 29 626 new cars sold in September 2023, with sales to the car rental industry accounting for a substantial 28% of these sales.

Sales of new light commercial vehicles, bakkies and mini-buses decreased year-on-year last month by 17.1% to 10 914 units, and heavy truck and bus sales by 18% to 1 535 units while sales of medium commercial vehicles increased by 0.5% to 821 units.

Cohen said although the industry is not out of the woods yet, the data is showing positive signs in the domestic market and sentiment continues to improve.

“This momentum will hopefully translate into stronger sales in the medium to long term," he said.

Naamsa CEO Mikel Mabasa said economic indicators in September 2024 showed positive trends, including the first interest rate cut in four years by the South African Reserve Bank, a stronger rand exchange rate, and easing inflation below the mid-point of the central bank’s target range.

Mabasa said lower fuel prices further bolstered consumer confidence, offering relief to household budgets.

He said the passenger car segment has shown a positive trend in recent months, boosted by rental sales, currency strength and decreasing inflation.

“As the country anticipates further interest rate reductions, the cost of borrowing is expected to decline, which may stimulate economic activity, even though immediate improvements in vehicle affordability may be limited.

“Since the decline in new vehicle sales began in August 2023, expectations are rising that the new vehicle market could see an improvement for the remainder of the year owing to favourable economic conditions and the comparison to last year’s lower base levels,” he said.