New-vehicle market continues recovery

The new-vehicle market continued on its road to recovery during the month of April 2022.

Screenshot 2022 05 06 124406

Mikel Mabasa, CEO of automotive business council naamsa, says the recovery continued despite the trail of destruction in parts of KwaZulu-Natal following the large-scale flooding, which caused supply chain disruptions in port, rail and road traffic as well as the suspension of production at Toyota South Africa Motors.

Mabasa says sales in the volume passenger car segment performed well, assisted by ongoing strong purchases by vehicle rental companies. But, he says, the other segments of the market performed weaker.

Total domestic new-vehicle sales in April 2022 increased by 4.3% to 37 107 units from the 35 591 vehicles sold in the corresponding month in 2021.

Of the total reported 37 107 industry vehicle sales, an estimated 88.4% or 32 809 units represented dealer sales, 9.1% sales to the vehicle rental industry, 1.5% sales to government and 1.0% sales to industry corporate fleets.

Sales of new passenger cars increased by 12.9% to 26 653 units from the 22 729 new cars sold in April 2021.

Mabasa says the car rental industry supported the new passenger car market during April 2022 and accounted for 12.5% of car sales in the month.

Sales of new light commercial vehicles, bakkies and mini-buses declined year-on-year by 11.9% to 9 558 units, medium commercial vehicles by 9.4% to 475 units and heavy trucks and buses by 4.6% to 1 421 units.

Mabasa says the number of public holidays normally provides fewer selling days during the month of April, which softens sales.

However, Mabasa reckons that in addition to the renewed impact of COVID-19, particularly in China, the global shortages of semiconductors and the repercussions of the geo-political conflict with Russia’s invasion of the Ukraine, the added shock of the flooding disaster in KwaZulu-Natal to domestic business conditions “will be felt for some time to come”.

“The domestic automotive industry is expected to continue a stop-start recovery in 2022 in view of prevailing COVID-19-related supply chain disruptions, insufficient stock and escalating energy and transport cost increases,” he says.

Nedbank’s group economic unit says the new-vehicle sales market remained resilient in April 2022, but the outlook remains “clouded with risks tilted to the downside”.

The bank says that while households' disposable income was sheltered from the excessive fuel price increases in April and May by the cut in the fuel levy, a swift weakening of the rand exchange rate and still high global oil prices will keep fuel costs elevated.

In addition, household incomes will be eroded by higher food inflation, expensive utilities and further increases in interest rates throughout 2022 and 2023, it says.

“The impact of the flooding in KZN is also expected to weigh on the domestic supply of vehicles and dampen domestic demand.

“On the global front, the ongoing Russian-Ukraine war, combined with strict lockdown restrictions in parts of China, will exacerbate supply chain blockages, freight costs and semiconductor shortages.

“Consequently, global growth prospects will be lower than anticipated, negatively impacting export volumes to Europe and the UK. However, some reprieve is expected to stem from the introduction of new models,” it says.

Export sales of locally produced vehicles increased by 16% to 30 788 units in April 2022 from the 26 540 vehicles exported in April 2021.

View full results here: AVAF Infographic NAAMSA April 2022

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