Naamsa CEO, Mikel Mabasa, said the new vehicle market environment has been challenging and that the market’s prolonged recovery from the COVID-19 pandemic stuttered towards the second half of 2023 following two previous years of sound rebound.

“We have not been able to outperform the 2019 pre-pandemic levels yet but we remain hopeful that 2024 will deliver a different outcome for new vehicle sales in South Africa,” he said.

Mabasa said the market was still 1.3% below the pre-pandemic level in 2022 and for most of 2023 it was well on track to recover to the pre-pandemic level of 2019.

However, he said the new vehicle market’s ability to fully recover was undermined by a depressed economy, elevated cost of living increases and power outages, with new vehicle sales finally yielding to the pressure caused by major logistical challenges at the country’s ports towards the end of the year.

New vehicle sales in the 2023 calendar year increased by only 0.5% year-on-year to 532 098 units from the 529 556 units sold in 2022.

Sales of new passenger cars in 2023 declined by 4.4% to 347 695 from the 363 692 units sold in 2022, while new light commercial vehicle sales increased by 11.6% to 151 499 units from 135 712 units.

Sales of medium commercial vehicles in 2023 dropped by 0.6% to 8 258 units from the 8 308 unit sales registered in 2022 but truck and bus sales grew by 12.8% to 24 646 units from 21 844 units.

Mabasa said total new vehicle sales would likely now take four years to recover to the pre-pandemic level of 536 612 units sold in 2019.

However, supported by the transport of goods forced onto roads owing to rail inefficiencies, heavy commercial vehicle sales already exceeded the pre-pandemic level in 2022, he added.

Mabasa stressed that South Africa’s weak economic growth rate, although still marginally positive, remained a key challenge for the new vehicle market going forward in view of the close correlation between new vehicle sales and the GDP growth rate.

“With a modest GDP growth rate of 1% projected for 2024, the new vehicle market would likely only improve by single digits of around 5% compared to the level of 2023.

“The pause in interest rate increases by the South African Reserve Bank during the second half of 2023 as well as the easing in inflation will continue to provide some support to counter the growing pressures on household incomes.

“Alongside faster economic growth and moderate inflation, lower interest rates would go a long way to support the new vehicle market in 2024,” he said.

In December, aggregate industry new vehicle sales declined by 3.3% to 40 329 units from 41 721 units in the corresponding month in 2022.

Sales of new passenger cars dropped by 3.9% year-on-year to 27 606 units in December, light commercial vehicles by 2.9% to 10 181 units and medium commercial vehicles by 24.2% to 609 units.

However, sales of heavy trucks and buses increased year-on-year in December by 13.9% to 1 933 units.

Overall, out of the total reported industry sales of 40 329 vehicles in December, an estimated 88% or 35 483 units represented dealer sales, 8.7% sales to the vehicle rental industry, 2.2% sales to government and 1.1% sales to industry corporate fleets.