Mikel Mabasa, CEO of automotive business council, naamsa, says the weak performance of the passenger car market reflects the impact of the rising cost of living and lower disposable income on consumer sentiment and the ability to be active in the new vehicle market.

“Affordability, along with delayed replacement cycles, appear to be driving new vehicle sales,” he says.

Total new vehicle sales declined last month to 45 679 units from the 47 155 vehicles sold in August 2022.

Of the total reported industry sales of 45 679 vehicles, an estimated 83.8% or 38 292 units represented dealer sales, with an approximated 12.2% representing sales to the vehicle rental industry, 2.8% to industry corporate fleets and 1.2% sales to government.

New passenger car sales dropped to 28 951 units from the 31 015 units sold in 2022.

It was the only segment of the new vehicle market to register a decline in sales in the month, despite the car rental industry accounting for 16.2% of new car sales last month.

Sales of new light commercial vehicles, bakkies and minibuses increased by 2.7% to 13 652 units in August 2023 from the 13 289 units sold in the corresponding month in 2022.

Sales for medium commercial vehicles rose marginally year-on-year by two units or 0.3% to 702 units, while heavy truck and bus sales grew by 10.4% to 2 374 units.

Mabasa says the weak new vehicle sales performance underlines the ongoing stressed business and consumer environment in the country given that negative economic considerations still greatly outweigh positive ones.

He says that on the positive side, the significantly less daytime load shedding since June 2023, interest rates that were put on hold in July 2023 for the first time since November 2021 and inflation now firmly falling within the 3% to 6% target band have been providing some relief for consumers.

However, Mabasa says energy and logistical constraints remain binding on the domestic economic growth outlook, limiting economic activity and increasing costs.

Mabasa adds that although the SA Reserve Bank has slightly increased its forecast for South Africa’s GDP growth from 0.3% to 0.4% for 2023, the medium-term outlook for business conditions in the new vehicle market continues to reflect subdued demand for high-priced items, such as vehicles, which correlates with a stagnating domestic economy.

View the full results here: AVAF Infographic naamsa August 2023