NADA expects much better year in 2022

New vehicle sales are expected to grow by between 10% and 15% in 2022, according to the National Automobile Dealers’ Association (NADA).

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However, NADA Vice Chairperson, Alex Boavida, says this projection is dependent on stock supply normalising swiftly. Boavida added that the estimate is based on buoyant sales in the first month of the year, together with positive market trends seen in 2021.

New vehicle sales kicked off impressively in the new year, with new car sales increasing by 26.6% to 30 037 units from the 23 732 units sold in January 2021 and overall total new vehicle sales growing by 19.5% year-on-year to 41 382 units.

NADA’s new vehicle market growth forecast is significantly higher than that of automotive business council, naamsa, which is anticipating a year-on-year improvement in new vehicle sales of about 8% in 2022.

Economists are more pessimistic about new vehicle sales growth in 2022 and are forecasting that sales for the year will improve by about 5%. However, Boavida says NADA expects sales to be back to pre-pandemic numbers in 2022.

“Last year proved to be a much better year than expected when compared to 2020, with 22% growth thanks to local sales of 86 7673 more units than in 2020.

“We were, however, still not back to the market levels of 2019 and lagged by 14% or 72 490 units compared to results from two years ago,” she says.

NADA reckons the average growth of 16% across all vehicle categories in 2021 was heartening.

Extra-heavy commercials were the best performer with sales up 24% while passenger car sales were not far behind, increasing year-on-year by 23% and 57 177 more cars being sold than in 2020.

Boavida says these were positive results in a year dogged by a great deal of turmoil, including the ongoing COVID-19 pandemic, civil unrest and interest rate and fuel price hikes.

“The global shortage of semiconductors, or microchips as they are better known, and other automotive components has also impacted new vehicle production for the past two years, but a normalised stream of stock entering South Africa will help to bolster sales numbers in 2022.

“This strong performance in times of adversity underlines the resilience and determination to succeed that exists in the local motor industry. We are grateful for the continuing support from our customer bases, which also indicates economic activity is starting to move in the right direction,” she says.

Boavida adds that the upward movement in interest rates and fuel prices will affect passenger car sales more than commercial vehicle sales. She says interest rates are predicted to increase by as much as 1.5 percentage points in 2022.

“This is significant in a country where consumers have more debt exposure than in previous years and hikes put added strain on consumers’ disposable income,” she says.

Boavida adds that NADA envisages that the increased introduction of electric vehicles (EVs) into the South African market will be a growing trend in 2022.

“We see more manufacturers launching electric models in South Africa this year, putting additional focus and emphasis on this sales channel.

“We see intensified consumer education on the benefits of these vehicles, as well as an increase in the emphasis on technology, such as applications specifically developed for customers.

"This will create new revenue streams for OEMs [original equipment manufacturers] and dealers, as well as generate enhanced consumer-centric offerings quickly and efficiently,” she says.

Nada says the undertaking by government to improve the ease of doing business in South Africa will go a long way towards reducing the overhead compliance costs of motor retailers, which in turn in the long term will translate to savings for the consumer.

NADA eagerly awaits government’s engagement on this undertaking, she says.

Boavida reckons NADA will continue to educate customers on the Automotive Guidelines, which affect both new car sales and the aftermarket.

“NADA will continue to ensure our retail dealerships are treated fairly and are not prejudiced by new laws and regulations, while providing these dealerships with all the information and opportunities they require to grow and succeed in 2022,” she says.

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