New vehicle sales continue to struggle

New vehicle sales were on the skids again in June as consumers continued to grapple with affordability issues.

Screenshot 2024 07 03 095724

Aggregate domestic new vehicle sales slumped by 14% to 40 072 units last month from the 46 603 vehicles sold in June 2023, with all four segments of the market recording significant declines.

Overall, out of the total reported industry sales of 40 072 vehicles, an estimated 82.5% or 33 039 units represented dealer sales, 11.0% sales went to the vehicle rental industry, 3.6% sales to government and 2.9% sales to industry corporate fleets.

Mikel Mabasa, the CEO of automotive business council, naamsa, says the ongoing downward slide in the new market since August 2023 underscored the constrained economic environment in the country, amplified by weak consumer and business demand.

“New vehicle sales further declined in June 2024 as South African households continued to grapple with consistent cost pressures in a weak economic environment with affordability remaining a decisive factor in new vehicle purchasing decisions,” he says.

Sales of new passenger cars declined by 9.0% to 26 928 units in June 2024 from the 29 599 new cars sold in the corresponding month in 2023.

Mabasa says car rental sales accounted for a significant 14.2% of new passenger vehicles sold during the month, underscoring the lower demand from private buyers.

Sales of new light commercial vehicles, bakkies and mini buses nosedived by 24.3% to 10 552 units last month from the 13 937 units sold in June 2023.

Sales for medium commercial vehicles dropped year-on-year by 27.7% to 531 units in June and heavy truck and bus sales by 11.7% to 2 061 units.

Mabasa says cumulative new vehicle sales for the first six months of the year are now tracking 7.6% below the corresponding period in 2023, which is in line with industry expectations of a taxing first half of the year.

However, Mabasa says the markets seem to have responded positively to the announcement of the new Cabinet, and brighter economic prospects for the second half of the year are steadily improving because of a third month of no load-shedding, a further welcome relief at the fuel pumps in July 2024 reducing inflationary pressure and likely lower interest rates to commence before year-end.

Mabasa says naamsa welcomes the appointment of the new Cabinet in the Government of National Unity (GNU) announced by President Cyril Ramaphosa on 30 June 2024, particularly the appointment of Parks Tau as the new Minister of Trade, Industry and Competition.

He says the dtic is the automotive industry’s line department and a custodian of all automotive policy regime in South Africa.

“Minister Tau is no stranger to the auto industry and has significantly contributed to our sector in the past, and we look forward to working with him as we reimagine the future of the automotive industry together.

“South Africa’s seventh administration now has a unique opportunity to accelerate implementing structural reforms and turning the economy around,” he says.

More information: AVAF Infographic June 2024

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