New Vehicle Market remains steady - naamsa

The new vehicle market’s performance during October 2022 remained reassuring despite tough economic pressures, although the pace of recovery for the year to date has eased, says automotive business council, naamsa.

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naamsa CEO, Mikel Mabasa, said the new vehicle market was confronted with further headwinds during the month, such as logistical disruptions.

Aggregate domestic new vehicle sales increased by 11.4% in October 2022 to 45 966 units from the 41 251 vehicles sold in the corresponding month in 2021.

Overall, an estimated 82.6% or 37 983 units out of the total reported industry sales of 45 966 vehicles represented dealer sales.

An estimated 13.1% of total reported sales in the month represented sales to the vehicle rental industry, 2.4% sales to government and 1.9% sales to industry corporate fleets.

Mabasa said the new vehicle market’s performance during October 2022 remained reassuring but the pace of recovery for the year to date has eased to a positive growth of 13.1% from 13.4% in September 2022.

He added that apart from seasonal support from the car rental industry, the monthly sales figures have been enhanced by a new naamsa member company that has started to report new vehicle sales since the second half of the year.

This is a reference to Chery Auto South Africa, which has reported total sales of 5 163 units in the four months from July to October this year.

Mabasa said the growth prospects for the balance of the year remained constrained as higher interest rates and consequent higher debt servicing costs weighed on disposable income.

New passenger car sales increased by 10.4% in October 2022 to 30 597 units from the 27 716 new cars sold in the corresponding month in 2021.

The car rental industry accounted for a solid 17.4% of new passenger car sales in October 2022.

Sales of new light commercial vehicles, bakkies and mini-buses rose by 14.3% year-on-year in October 2022 to 12738 units, medium commercial vehicles by 29.9% to 769 units and heavy truck and bus sales by 3.7% to 1 862 units.

Nedbank’s group economic unit said the vehicle market showed the effects of the Transnet labour strike in October 2022 as local sales fell partly owing to a shortage of some imported models.

The bank said total local sales dropped by 4.2% month-on-month, with passenger car sales down by 5.5% and commercial vehicle sales by 1.4%.

It said domestic sales will likely slow further during the remainder of this year and next year, adding that regular and disruptive power outages would continue to undermine vehicle production and sales.

Nedbank said weaker household finances would also weigh on consumer demand for vehicles.

“Generally, higher inflation and the rapid rise in interest rates will gradually erode household incomes and subdue demand for credit.

“Interest rate hikes typically take between 12 and 18 months to affect demand, suggesting that the slowdown in the passenger and light commercial vehicle markets will likely intensify in 2023.

“Company demand is likely to continue being more resilient as the recovery in the travel, tourism and hospitality industries continues but still has some way to go to reach pre-pandemic levels,” it said.

Read the full report here: AVAF Infographic naamsa October 2022

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