Mikel Mabasa, the CEO of automotive business council, naamsa, says the persisting economic strain remains a real concern for household income, and the weak new vehicle market reflects middle-income households at present limiting big financial commitments for items such as vehicles.

Mabasa says the ripple effect of higher interest rates, higher fuel prices and no relief for personal income taxpayers in the 2024/2025 tax year will continue to impact household income for the foreseeable future.

He added that economic uncertainty remains the reality for most households and businesses, with the date of the 2024 South African general election announced to take place on 29 May 2024.

“Brands and dealerships are currently offering enticing incentives to prospective buyers, but it is anticipated that only once the interest rate cutting cycle commences, likely during the second half of the year, along with easing inflation, would some upward momentum be sparked in the new vehicle market,” he says.

Total domestic new vehicle sales declined by 0.9% to 44 749 units last month from the 45 162 vehicles sold in February 2023.

An estimated 84.7% or 37 913 units out of the total reported industry sales of 44 749 units represented dealer sales, 9.6% sales to the vehicle rental industry, 3.4% sales to government and 2.3% sales to industry corporate fleets.

Sales of new passenger vehicles declined by 3.1% to 28 857 units in February 2024 from the 29 782 cars sold in the corresponding months in 2023, with car rental sales accounting for 12.9% of new passenger vehicles sales during the month.

Sales of new light commercial vehicles, bakkies and mini-buses increased year-on-year by 2.5% to 13 306 units last month, and heavy truck and bus sales by 14% to 1 941 units while sales of medium commercial vehicles dropped by 7.7% to 645 units.

Lebo Gaoaketse, the head of marketing and communication at WesBank, says if January 2024 new vehicle sales had started with the choke on, sales in February 2024 appear to have settled into a smoother idle.

Gaoaketse says although new vehicle sales were still down 0.9% year-on-year in the second month of the year, they were significantly improved over sales registered in January this year in volume terms.

This provides some hope for the industry, which has experienced seven consecutive months of volume sales decline, he says.

“February sales were the smallest decline in sales over the past seven consecutive months of negative growth. The month also represented a fairly robust volume, which was slightly higher than the average monthly sales last year,” he says.

AVAF Infographic February 2024