Nada believes auto industry will pick up

The National Automobile Dealers’ Association (Nada) put a positive spin on the domestic new vehicle sales figures for April 2023 despite the year-on-year decline in sales.

Mark Dommisse

Nada chairperson, Mark Dommisse, said the fact that April this year was bracketed by two long weekends and included school holidays meant it was highly likely that there would be a dip in the sales of new vehicles.

“But it turned out better than anticipated, with the total of 37 107 units sold being only 0.2% or 88 units fewer than the figure for April 2022,” he said.

Dommisse added that there was a strong sales push by dealers in March because it was the end of a quarter and most of the manufacturers and distributors/importers increased prices from 1 April 2023.

The relevance of March being the end of a quarter is that new-vehicle dealerships receive quarterly incentives from original equipment manufacturers (OEMs) for hitting their quarterly sales targets.

Overall, new-vehicle sales declined by 25.7% or 12 886 units in April 2023 from the 49 993 units sold in March 2023.

Dommisse said 90.3% of new-vehicle sales in April 2023 went through the retail channel, which is good news for the industry.

He said the remainder of the sales was split among the rental industry with 5.2%, which was a drop of of 54.5%, industry corporate fleets at 2.8% and deliveries to the government, which amounted to only 1.7%.

Dommisse said passenger cars were down 6.1% to 24 174 units last month compared to April 2022 but it was encouraging to see sales of light commercials up by a surprising 11.1% to 10 611 units.

He said medium trucks also performed better with sales 20.3% higher, while the heavy commercial vehicle segment topped that figure, with an increase of 23% compared to April last year.

“Despite numerous headwinds in terms of load-shedding, petrol price hikes, logistical challenges and the like, the year-to-date figure of 175 678 units for the first four months of 2023 is 1.3% higher than a year ago.

“Export sales rose by 13.4% to 30 756 units in April, more good news for the industry in these trying times. The year-to-date export figure is almost comparable to the same period last year,” he said.

Dommisse said a discouraging factor that was evident when surveying the upcoming months was the decline in bank approvals during April 2023. “This downward trend can be partially ascribed to the amplified cost of instalments, brought about by the numerous interest rate hikes.

“These hikes have rendered new-vehicle purchases less affordable for customers, thereby affecting their ability to obtain bank approvals,” he said.

Dommisse added that new-vehicle stock supply remained sporadic but this was limited to certain segments only.

He said there was another significant increase in the price of petrol in May and the possibility of a further interest rate hike announcement at the end of this month.

“We trust the proven track record of the motor industry will prevail and future sales may not be as badly affected as some people are forecasting,” he said.

Among others, this is a reference to comments made by Mikel Mabasa, the CEO of naamsa, who indicated that the automotive business council expected the domestic vehicle market to remain reserved for the greater part of 2023.

However, Dommisse said: “All in all, the sales performance in April reflected the ongoing resilience of the dealer network to perform well under very stressful circumstances, such as fewer trading days, higher interest rates, higher vehicle prices and the ongoing energy crisis.”

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