NADA sees silver lining in new vehicle market

The National Automobile Dealers’ Association (NADA) says it is reassuring to see a silver lining in the new vehicle market.

Mark Dommisse National Chairperson NADA

NADA chairperson, Mark Dommisse, says new vehicle retail sales in July 2022 remained remarkably buoyant in a tough market characterised by rising inflation, interest rates and the fuel price, and an ongoing shortage of new vehicle stock owing to chip shortages and logistical challenges.

In addition, Dommisse says the recovery of the Toyota plant from major flood damage at its manufacturing facility near Durban, albeit slow, is to be welcomed together with the opening of new extensions to Toyota’s central parts distribution facility in Ekurhuleni following a further investment of R365 million in this sector,

Dommisse says there was also a welcome cutback in electricity load shedding towards the end of the month, which is always good for business and consumer confidence.

“Of particular importance to the health of the local motor industry was the increase in vehicle exports, with a total of 31 242 units being shipped last month, which has finally lifted exports into positive territory on a year-to-date basis for the first time this year, being 2.9% ahead of the corresponding period in 2021,” he says.

However, Dommisse cautioned against making comparisons with sales in July 2021 because of the social unrest and rioting in KwaZulu-Natal and Gauteng at the time and the cyber-attack on Transnet, which severely impacted logistics at the harbour and on the roads.

Statistics released on Monday revealed that aggregate domestic new vehicle sales rose by 30.9% in July 2022 to 43 593 units from the 33 312 vehicles sold in July last year.

Sales of new passenger cars increased year-on-year in July 2022 by 50.2% to 31 455 units, medium commercial vehicles by 33.0% to 790 units and heavy truck and bus sales by 18.3% to 1 801 units, while sales of new light commercial vehicles, bakkies and minibuses declined by 6.9% to 9 547 units.

Dommisse says the retail dealer sales channel accounted for 83.6% of the reported overall sales of 43 455 units in July 2022, which was heartening.

He says the new vehicle sales statistics, while acceptable and healthy at more than 43 000 units, were still below market forecasts.

Dommisse attributed this partly to market leader Toyota being unable to supply and conditions in the new vehicle market being on a downturn.

He says the used vehicle market, which has been booming, is experiencing a slowdown owing to increased financial burdens taking their toll on the consumer in the face of economic pressures.

Dommisse says total local market sales at 297 133 units on a year-to-date basis are 13.9% ahead of the same seven-month period in 2021, which is good news.

He says the supply rate of new vehicles is expected to improve but warned that the remainder of 2022 would be tough economically.

“However, I am confident that our motor dealers will continue to be as resilient as ever and accept the challenges awaiting them in the next five months to the end of the year,” he says.

Nedbank’s group economic unit says the sales outlook still contains considerable downside risks.

The unit says geopolitical tensions continue to exert upward pressure on commodity prices while the resurgence of COVID-19 cases in China may once again worsen supply chain bottlenecks.

It added that higher inflation will continue to weigh heavily on household finances as the rising cost of essentials, such as food and fuel, erodes the purchasing power of consumers, negatively impacting consumers' discretionary spending.

Nedbank says global growth prospects, particularly in the Eurozone, is another major downside risk.

“The latest data shows that consumers' willingness to make big-ticket purchases deteriorated to levels last seen at the pandemic's peak as high inflation, rising interest rates and war-related concerns continue to mount.

“However, the introduction of new vehicle models is expected to lend some support to exports,” it says.

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