New vehicle sales resilient, despite weak economy

New vehicle sales continued to astound, says the National Automobile Dealers’ Association (Nada).

Mark Dommisse

Mark Dommisse, chairperson of Nada, said relatively strong sales of new motor vehicles in South Africa last month have been a pleasant surprise to the local motor industry and dealer networks.

“We were expecting a similar market to October, considering the negatives affecting the economy and growing political uncertainty in the country, but consumers have once again proved us wrong.

“November’s tally of 49 413 units shows an improvement of nearly 3 500 sales from just one month ago and represents a significant 18.2% increase on the number of units sold in the same month last year.

“This is most heartening for all sectors of the industry,” he said.

Dommisse said dealers enjoyed another good month last month, with 81% or almost 40 000 in total sales moving through retail channels.

He said rental sales were also strong as hire companies bought 14.7% of total vehicles and 20% of passenger cars as they prepared for what would hopefully be a bumper festive season.

“These sales are important to the second-hand vehicle market, as rental models will filter down to the used vehicle market in a year or two, helping to alleviate the relative shortage of quality, low mileage pre-owned models that have been in short supply owing to the COVID-19 pandemic and [fleet] sell-offs by rental companies,” he said.

Dommisse added that the consumer trend of buying less expensive and smaller cars, usually sport utility vehicles (SUVs) or crossovers, continued and the stock position has fortunately improved to meet this demand.

He said Toyota was still recovering from lost production owing to the four-month stoppage at its plant in Durban caused by flooding in April this year, and the local manufacturer was obviously catching up on deliveries that should have been made earlier in the year, which is affecting the market positively.

“There were also strong sales in the various commercial vehicle markets, all showing growth compared to November 2021.

“This indicates improving business confidence, even in these tough economic times,” he said.

Dommisse said another positive sign for the motor industry as it headed for the end of the year was another particularly good month for exports, which increased by 64.7% to 34 310 vehicles in November 2022 compared to a year ago.

Nedbank’s group economic unit said vehicle sales and exports rebounded after the disruption at the ports following the Transnet strike in October this year, which helped to normalise vehicle production and export activity.

It said export volumes rose by a robust 19.1% month-on-month to 34 310 units as car terminals at the key ports reopened, facilitating a normalisation in trade and resulting in exports increasing by 64.7% from a year ago.

Nedbank said exported units year-to-date totalled 331 912 units, 23.7% more than for the same period last year, which pointed to easing global supply chain pressures despite bottlenecks not being entirely cleared and risks persisting because of lockdowns associated with China's COVID-19 policies and the war in Ukraine.

It believed the new vehicle market would likely remain relatively buoyant in the first half of next year as pent-up demand was slowly met and dealers worked through long waiting lists.

The ongoing recovery in the travel, tourism and hospitality industries should continue to buoy the rental market but domestic sales will slow as the year progressed because of inflation and the rapid rise in interest rates, it said.

Nedbank added that vehicle production and sales would be undermined by regular and disruptive power outages and the continued risk of global supply chain disruptions.

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