This is an improvement from the 55.6% of CEOs in the third quarter of 2022 who believed domestic new vehicle sales would increase in the next six months.

However, it is significantly lower than the astounding 92.9% of CEOs who, in the first quarter of 2022, believed domestic sales would increase in the next six months.

The confidence of CEOs in future new vehicle sales plummeted to 55% in the second quarter of 2022 before improving marginally to 55.6% in the third quarter and 67% in the fourth quarter of 2022.

In the fourth quarter of last year, 25% of CEOs believed sales would remain the same in the next six months and 8% that sales would decline.

In the first quarter of 2022, none of CEOs believed domestic new vehicle sales would decrease in the next six months.

The perception of naamsa-affiliated CEOs about general new vehicle business conditions in the next six months is also discouraging.

Only 33% of naamsa-affiliated CEOs in the fourth quarter of 2022 believed that general new vehicle business conditions would improve in the next six months compared to the 75% who held this view in the fourth quarter in 2021.

Mikel Mabasa, the CEO of naamsa, said auto industry CEOs remain cautiously optimistic about prospects related to the automotive industry’s key performance indicators over the next six months despite a deteriorating domestic and global economic environment.

“New vehicle business conditions are expected to remain challenging owing to persistent and higher stages of power outages, ongoing inflationary pressures and a higher interest-rate environment reducing disposable income and dampening consumer and business sentiment.

“Many downside risks to growth persist, and the new vehicle market’s renowned resilience will again be duly tested in 2023,” he said.

Commenting on business conditions and the medium-term outlook for the new vehicle market, Mabasa said despite a depressed economy, structural economic problems and cost of living increases, the new vehicle market continued to outperform expectations during fourth quarter 2022.

However, Mabasa said business conditions continued to be challenging as the South African Reserve Bank raised interest rates in the fourth quarter for the eighth consecutive time since November 2021 as part of its most aggressive monetary policy tightening cycle in at least two decades with the aim of taming inflation by suppressing demand in the economy.

Mabasa said the new vehicle market would face the same challenges in 2023 that confronted it and the economy in 2022.

He said the Reserve Bank has adjusted the country’s GDP growth rate for 2023 down to only 0.3% owing to extensive load-shedding and other logistical constraints.

“It is anticipated that unpredictability in the new vehicle market will prevail but that sales would exceed the pre-COVID-19 level in 2023.

“The impact of the economic downturn, the protracted geopolitical conflict risks as well as load-shedding, the latter not only impacting on the cost but also the ability to do business in South Africa, remain major concerns for 2023.

“However, prospects for vehicle export growth remain optimistic on the back of further new model introductions by major exporters in the domestic market,” he said.

View more here: AVAF Infographic naamsa February 2023